UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


?i 


^?T^ 


STATE   INSURANCE 


STATE  INSURANCE 

A  SOCIAL  AND  INDUSTRIAL  NEED 

BY 

FRANK  W.  LEWIS 


BOSTON  AND   NEW  YORK 

HOUGHTON  MIFFLIN  COMPANY 

(Ct)e  Clitactjtfibc  prc0i^  Cambridge 

1909 


COPYRIGHT,    IQ09,   BY   FRANK  W.    LEWIS 
ALL   RIGHTS    RESERVED 

Published  March  IQ09 


•J 


WITH   FRATERNAL   INTEREST  THIS   BOOK   IS 

RESPECTFULLY   DEDICATED   TO 

THE   WAGE-EARNER 


3 

^\>» 


4 


208115 


"/^  happens,  as  though  through  some  inad- 
vertence, that  in  making  a  contract  of  the  great- 
est possible  moment,  both  parties  seem  to  ignore 
absolutely  certain  very  important  elements.  Tlw 
contract  is  made  as  though  sickness,  accidents, 
invalidity  and  old  age  had  been  permanently 
banished  from  the  earth.  The  daily  wage  is 
sufficient  only  for  daily  necessities;  a  man 
entitled  to  support  for  a  lifetime  unwittingly 
consents  to  a  wage  based  upon  a  portion  of  that 
lifetime;  for  the  competition  in  the  field  of  labor 
is  among  the  strong,  the  able-bodied,  the  effi- 
cient; the  sick,  the  maimed,  the  superannuated 
are  necessarily  excluded "'  (p.  7). 


PREFACE 

This  volume  finds  its  justification  in  the  keen 
interest  which,  from  various  causes,  has  been 
aroused  in  the  subject  of  personal  insurance. 

If  it  shall  tend  to  stimulate  interest  and  dis- 
cussion concerning  a  question  of  so  profound 
and  urgent  importance  its  main  purpose  will 
have  been  accomplished. 

The  author  is  under  obligation  to  Dr. 
George  Zacher,  of  the  Imperial  Insurance 
Office,  Berlin,  for  permission  to  use  the  tables 
shown  in  Appendix  E.  While  the  data  given 
are  brought  down  only  to  the  year  1904,  they 
constitute  the  most  convenient  conspectus 
which  has  yet  appeared. 

Boston,  November,  1908. 


CONTENTS 

I.  The  Problem 1 

II.  The  Functions  of  a  State 25 

III.  State  Insurance 42 

IV.  Workmen's  Insurance  in  Germany     ...  60 

V.    Accident  Insurance  and  Workmen's  Com- 
pensation     78 

VI.    Existing  Institutions Ill 

VII.    Incidence        135 

VIII.    Old-Age  Pensions 148 

IX.    Conclusion 171 

Appendices 179 

A.  Section  of  Prussian  Railroad  Law. 

B.  Sections  of  Georgia  Laws. 

C.  Sections  of  Massachusetts  Laws. 

D.  British  Workmen's  Compensation  Act 
OF  1906. 

E.  Workmen's  Sickness,  Accident,  and 
Invalid  Insurance  in  Germany  and 
Other  Continental  Countries. 

Index 231 


STATE  INSUKANCE 


THE   PROBLEM 

It  is  the  purpose  of  this  volume  to  point  out 
what  seem  to  be  certain  faults  in  present 
social  and  industrial  conditions,  and  to  sug- 
gest how  these  faults  might  be  corrected  in 
some  measure  by  a  system  of  compulsory 
state  insurance.  It  is  believed  that  the  policy 
indicated  might  result  in  mitigating  poverty, 
in  allaying  social  unrest,  and  in  contributing 
to  a  higher  degree  of  industrial  peace. 

During  the  past  century  great  labor-saving 
inventions,  the  application  of  steam  and  elec- 
tricity to  machinery,  resulting  in  the  so-called 
factory  system,  have  completely  transformed 
the  industrial  world.  Laws,  customs,  and 
methods  adapted  to  the  old  order  of  things 
have  frequently  proved  entirely  unsuited  to 
the  new.  But  the  immense  progress  made  in 
the  arts  and  sciences  has  found  no  counter- 
part in  the  laws  and  customs  which  that  pro- 
gress demanded.  We  often  discard  the  ma- 
chine that  is  five  or  ten  years  old  for  something 


«  STATE  INSURANCE 

better,  but  we  are  content  to  live  under  laws 
and  practices  which  have  remained  almost 
unchanged  for  three  hundred  years  and  which 
have  little  to  commend  them  except  their  anti- 
quity. In  the  world  of  mechanics,  of  manu- 
factures, of  physical  science,  and  of  commerce, 
the  inventive  mind  is  constantly  on  the  alert 
to  discover  better,  simpler,  more  economical 
or  more  effective  methods,  while  the  legislator 
boasts  of  treading  in  antiquas  vias,  as  if  it 
were  a  virtue  and  as  if  there  were  no  unex- 
plored regions  in  the  field  of  social  or  political 
science,  no  discoveries  to  be  made,  no  reforms 
to  be  achieved. 

There  is  a  principle  underlying  this  discus- 
sion which  is  briefly  comprehended  in  the 
maxim  that  every  man  is  entitled  to  a  living, 
or,  stated  in  other  words,  that  he  is  entitled  to 
a  living  wage  for  his  labor.  This  right  has 
been  called  a  natural,  a  political,  an  ethical 
right.  For  our  purposes  it  is  immaterial  what 
name  is  given  to  it ;  it  is  sufficient  that  we  re- 
cognize it  universally,  not  only  in  theory  but  in 
practice.  If  a  man's  life  is  sacred,  if  he  is  not 
to  be  stricken  down  by  the  assassin,  so  his 
right  to  a  living  shall  be  guarded  —  he  shall 
not  be  allowed  to  starve.  The  right  to  life  and 
the  right  to  a  living  are  not  to  be  distinguished. 
*'He  that  taketh  away  his  neighbor's  living 
slayeth   him;   and   he   that   defraudeth   the 


THE  PROBLEM  3 

laborer  of  his  hire  is  a  bloodshedder."  ^  This 
may  be  applicable  not  merely  to  an  individual, 
but  to  a  condition  of  society  or  to  a  defective 
industrial  system.  This  right  has  been  as- 
serted frequently  and  emphatically  by  the 
highest  authorities.  According  to  Cardinal 
Manning,  it  is  a  doctrine  of  the  Catholic 
Church  that  the  right  of  man  to  subsistence 
is  prior  to  the  rights  of  property.  Leo  XIII 
declared  that  it  was  "a  dictate  of  nature  more 
imperious  and  ancient  than  any  bargain  be- 
tween man  and  man  that  remuneration  must 
be  enough  to  support  the  wage-earner  in  rea- 
sonable and  frugal  comfort,"^  and  Montes- 
quieu maintained  that  the  state  owes  to  all 
of  its  citizens  an  assured  subsistence  and  a 
mode  of  life  consistent  with  health.^  To  Car- 
lyle  it  seemed  a  platitude  of  a  world  in  which 
all  working  horses  could  be  well  fed  and  in- 
numerable working  men  should  die  starved.'' 
Malthus,  on  the  other  hand,  foresaw  for  the 
near  future  the  superfluous  man  for  whom  no 
cover  should  be  laid  at  nature's  mighty  feast, 
whom  she  should  tell  to  begone. 

If  all  comers,  whether  by  immigration  or  by 

*  Ecclesiasticus,  xxxiv,  12. 

*  Rerum  Novarum.  Allocutiones,  vol.  iv,  p.  200.  OfBcial  trans- 
lation. 

^  Esprit  dc  Lois,  liv.  23,  ch.  29.  "L'Etat,  qui  doit  ii  tons  les 
citoycn.s  une  subsistance  assuree,  la  nourriture,  un  vetement  conve- 
nable,  et  un  penre  de  vie  qui  ne  soil  point  contraire  Hl  la  sante." 

*  Past  and  Present. 


4  STATE  INSURANCE 

birth,  are  not  to  be  welcomed  by  the  state,  the 
only  remedy  is  by  efficient  restriction ;  the  in- 
dividual should  be  denied  the  right  to  come  as 
an  immigrant,  even  the  right  to  be  born.  But 
theories  and  abstractions  aside,  every  civilized 
nation  acts  upon  the  principle  stated;  it  does 
not  propose  that  any  person  within  its  limits 
shall  perish  for  lack  of  food,  clothing,  or  shel- 
ter. Therefore,  without  analyzing  its  action,  it 
decides  in  substance  that  the  product  of  labor 
of  a  given  generation  must  support  all  during 
that  generation.* 

But  while  the  industries  of  a  community 
ought  to  support  the  great  body  of  workmen, 
it  is  true  that  specifically  any  given  industry 
ought  to  support  those  workmen  who  devote 
themselves  to  it.  This  consideration  is  highly 
important,  for  while  the  natural  wage-earning 
period  of  a  man  may  be  placed  at  about  fifty 
years,  there  are  industries  so  detrimental  to 
health  or  so  dangerous  to  life  that  they  may 
exhaust  the  capacity  for  work  in  twenty  years, 
or  even  less. 

In  considering  the  industrial  life  we  must 
weigh  the  waste  as  well  as  the  utilized,  the 
productive  portion.  If  the  wage  earned  during 
life  is  insufficient  to  cover  the  waste,  it  is  not  a 
living  wage.  If  a  given  industry  does  not  pay 
the  necessary  living  wage,  it  is  not  a  self-sup- 

'  F.  A.  Walker,  The  Wages  Question,  p.  34. 


THE  PROBLEM  5 

porting  industry;  it  is,  in  some  measure, 
parasitic. 

The  elements  of  cost  and  waste  have  been 
studied  with  somewhat  definite  results.  There 
is  the  rearing  of  children  to  the  age  of  self- 
support,  with  the  fact  that  about  thirteen  per 
cent  die  during  that  period ;  the  loss  from  the 
death  of  wage-earners  during  the  fifty  years 
of  the  assumed  productive  life,  estimated  at 
a  loss  of  twenty-five  per  cent  in  the  United 
States ;  ^  six  per  cent  lost  through  illness, 
nearly  an  average  of  nine  hundred  days  in 
fifty  years ;  ^  the  cost,  in  money  and  time,  of 
accidents ;  the  support  of  the  aged,  —  all  in- 
escapable elements. 

If  all  employers  were  a  unit,  and  if  this  unit 
were  intelligent  and  sagacious,  however  merci- 
less it  might  be ;  if  it  were  confronted  with  the 
problem  of  procuring  labor  merely  upon  hard 
business  principles,  keeping  in  mind  both  cost 
and  efficiency,  seeking  the  lowest  cost  con- 
sistent with  high  efficiency,  it  would  consider 
how  much  it  would  cost  to  rear  the  human 
being  or  the  class  of  human  beings  best  fitted 
for  its  purpose ;  how  long  a  period  of  infancy 
must  precede  his  capacity  to  work  and  what 
loss  from  death  would  occur  during  that  pe- 
riod ;  how  long  the  natural  term  of  labor  may 

*  F.  A.  Walker,  Wages,  p.  35. 

*  C.  S.  Loch,  Insurance  and  Savings,  p.  60. 


6  STATE  INSURANCE 

be  and  how  much  diminished  by  premature 
death ;  what  allowance  must  be  made  for  inca- 
pacity resulting  from  accidents,  from  sickness, 
from  invalidity  of  any  sort;  how  long  a  period 
of  dependence  there  would  be  after  working 
days  were  over.  It  would  find  that,  for  the 
best  results,  this  working  man  and  his  family 
must  be  well  clothed,  well  housed,  well  fed, 
and  that  he  must  live  and  work  under  proper 
hygienic  conditions;  that  he  must  have  hos- 
pital, medical  and  surgical  attention  in  illness 
and  after  accidents ;  it  would  even  find  that, 
to  a  certain  extent,  he  must  be  educated  and 
have  mental  and  moral  training.  Having 
determined  this  cost,  it  would  pay  that  and 
nothing  more.  In  other  words,  it  would  act 
as  intelligently,  not  to  say  humanely,  in  rear- 
ing a  workman  destined  for  efficient  labor  as 
it  now  does  in  rearing  a  beast  of  burden. 

On  the  other  hand,  labor,  acting  with  simi- 
lar intelligence  and  singleness  of  purpose,  and 
making  similar  allowances  for  waste,  could 
demand  nothing  less  than  the  cost  of  living 
for  the  whole  period  of  life  and  covering  all  its 
vicissitudes,  and  would  of  course  make  the 
scale  of  living  as  high  as  possible.  It  might 
have  in  addition  certain  theories  as  to  its  right 
to  a  certain  proportion  of  the  produce  of  labor 
and  be  very  keen  as  to  any  injustice  in  the  dis- 
tribution of  profits. 


THE  PROBLEM  7 

But  practically  it  happens,  as  though 
through  some  inadvertence,  that  in  making  a 
contract  of  the  greatest  possible  moment,  both 
parties  seem  to  ignore  absolutely  certain  very 
important  elements;  the  contract  is  made  as 
though  sickness,  accidents,  invalidity,  and  old 
age  had  been  permanently  banished  from  the 
earth.  The  daily  wage  is  sufficient  only  for 
daily  necessities;  a  man  entitled  to  support 
for  a  lifetime  unwittingly  consents  to  a  wage 
based  upon  a  portion  of  that  lifetime ;  for  the 
competition  in  the  field  of  labor  is  among  the 
strong,  the  able-bodied,  the  efficient ;  the  sick, 
the  maimed,  the  superannuated  are  necessar- 
ily excluded. 

The  disparity  between  the  wage  paid  during 
the  period  of  earning  capacity  and  a  wage  suf- 
ficient for  the  workman's  support  through- 
out his  life  is  most  striking  in  dangerous  and 
unhealthy  employments.  If  the  industry,  pay- 
ing what  is  a  living  wage  for  the  moment 
merely,  exhausts  its  victim  in  twenty  years  or 
less,  as  is  frequently  the  case,  it  has  drunk  the 
wine  of  the  wage-earner's  life  and  left  to  him, 
or  to  society,  the  dregs.  It  has  often  waste- 
fully  used  up  this  human  material  and  thrown 
the  wreck  aside  as  remorselessly  as  though  it 
were  inanimate  machinery.  The  injustice  of 
this  state  of  things  is  frequently  emphasized 
by  the  fact  that  those  very  industries  have 


8  STATE  INSURANCE 

yielded  large  profits  to  their  promoters.  It 
betrays  a  singular  apathy  on  the  part  of  the 
public  that  a  usage  so  abhorrent  to  every  in- 
stinct of  justice,  so  shocking  even  from  the 
standpoint  of  social  expediency,  should  go  on 
practically  unchallenged  for  generations. 

The  subject  has  usually  been  discussed  as 
though  it  concerned  individuals  or  classes,  the 
employer  and  the  workman,  to  be  governed 
by  the  maxim  laissez  faire^  involving  merely 
the  question  of  supply  and  demand  or  matter 
of  private  contract,  over  which  the  state  ought 
to  have  no  control.  This  might  be  a  safe  policy 
if  the  parties  to  the  labor  contract  met  on 
equal  terms;  but  we  cannot  ignore  the  fact 
that  there  is  no  industrial  equality  between 
them  necessarily.  In  communities  where  pop- 
ulation is  congested  or  those  where  immigra- 
tion is  easy  and  unrestricted,  —  not  to  say 
promoted  for  the  very  purpose  of  keeping 
down  wages  and  making  the  laboring  classes 
more  humble  and  subservient,^  —  the  rate  of 
wages  is  such  as  to  bring  the  scale  of  living 
very  near  to  what  is  vaguely  termed  the  line  of 
subsistence.  Rather  than  a  fixed  relation  be- 
tween supply  and  demand,  we  frequently  find 
what  might  be  termed  a  constant  demand  and 
a  supply  varying  at  the  will  of  those  who  fix 
wages ;  the  workman  brings  his  wares  to  an 

^  J.  G.  Brooks,  Social  Unrest,  p.  20. 


THE  PROBLEM  9 

overstocked  market  and  must  take  the  atti- 
tude of  a  suppliant.  The  situation  is  often 
aggravated  by  the  immobility  of  labor.  While 
mobility  is  highly  essential  to  the  well-being 
of  labor,  through  local  attachment,  through 
ignorance  of  other  localities  and  labor  condi- 
tions, through  that  degree  of  poverty  which 
makes  transportation  impossible,  through 
mere  inertia  resulting  from  the  debasement  of 
poverty,  the  laboring  man  does  not  migrate; 
he  does  not  even  pass  from  one  stratum  of 
labor  to  another  in  his  own  locality.^  We  do 
not  need  to  claim  universal  application  for 
the  "iron  law"  of  Lassalle  or  the  theories  of 
other  economists  upon  this  point ;  they  seem  to 
apply  to  some  localities  and  some  conditions. 
Whatever  the  cause  or  explanation,  there  are 
large  classes  of  laborers  in  this  country  who 
do  not  receive  a  living  wage  according  to  the 
standard  suggested,  —  a  wage  sufficient  for 
support  for  the  entire  life. 

Investigations  have  frequently  been  made 
to  determine  the  basis  of  wages,  judged  by 
their  sufficiency  for  the  maintenance  of  health, 
vigor,  and  physical  efficiency.  No  lower 
standard  could  be  justified  under  any  circum- 
stances, although,  as  a  matter  of  fact,  a  lower 
standard  does  obtain  often  over  wide  areas 
and  for  long  periods  of  time. 

'  F.  A.  Walker,  Wages,  ch.  xi. 


10  STATE  INSURANCE 

We  are  apt  to  think  of  the  laboring  classes 
in  this  country  as  well  fed,  well  clothed,  and 
well  housed,  and  not  proper  objects  of  solici- 
tude. We  are  incredulous  when  told  that 
Germany's  poorer  classes,  though  less  fav- 
ored by  circumstances,  maintain  a  higher 
level  of  well-being  and  a  far  higher  level  of 
vitality  than  those  of  either  the  United  States 
or  England;^  or  that  we  know  less  about  the 
poverty  of  our  people  than  almost  any  other 
nation  of  the  W^estern  world ;  ^  or  that  Ameri- 
cans work  themselves  out  at  an  earlier  age  and 
are  more  subject  to  jQuctuations  of  employ- 
ment than  European  workmen,  and  indus- 
trial accidents  are  much  more  frequent.^ 

As  a  basis  of  comparison,  we  might  take 
$600  per  annum  as  a  minimum  wage,  based 
upon  a  family  of  five  or  six,  in  industries  out- 
side of  agriculture.  Upon  a  figure  somewhere 
near  this,  there  has  been,  in  a  very  general 
way,  some  unanimity  of  opinion  among  ex- 
pert observers.*  While  the  minimum  wage 
permissible  varies  much  with  local  and  other 
conditions,  it  is  obvious  that  under  given  cir- 
cumstances it  must  be  quite  inelastic  in  the 
sense  that  it  cannot  be  materially  diminished 

'  A.  Shadwell,  Industrial  Efficiency,  ii,  453. 
^  Robert  Hunter,  Poverty,  p.  12. 

'  T.  S.  Adams  and  H.  L.  Sumner,  Labor  Problems,  p.  159. 
*  J.  A.  Ryan,  A  Living  Wage,  p.  150;  E.  T.  DcNine,  Principles 
of  Relief,  p.  35;  Hunter,  op.  cit.  p.  51,  and  authorities  there  cited. 


THE  PROBLEM  11 

without  consequent  suffering.  It  is  instruct- 
ive to  compare  this  minimum  wage  with 
actual  wages.  In  Massachusetts  during  a 
period  of  great  industrial  prosperity,  —  with 
the  necessary  attendant  cost  of  living,  — 
out  of  over  300,000  adult  workmen  only 
about  two  fifths  received  as  much  as  twelve 
dollars  per  week ;  this,  with  proper  allowance 
for  a  considerable  percentage  of  unemploy- 
ment, would  make  considerably  less  than 
$600  per  year.^  But  this  would  be  exceptional 
as  to  time  and  locality.  It  has  been  said  that 
the  18,000,000  wage-earners  of  the  United 
States  receive  an  average  wage  of  only  $-100 
per  annum  ;^  that  the  mass  of  unskilled  work- 
men in  the  Northern  States  receive  less  than 
$460  and  in  the  Southern  States  less  than  $300 ; 
that  even  this  lower  figure  may  be  reduced  by 
unemployment  to  $225  to  $250  per  year;^  and 
this  for  large  classes  of  workmen  and  for  con- 
siderable periods  of  time. 

These  figures  would  seem  to  show  the  gross 
inadequacy  of  wages  even  if  the  vicissitudes  of 
life  are  entirely  disregarded,  —  as  they  are 
and  must  be  by  the  great  majority  of  laborers, 

*  Compare  Mass.  Labor  Bulletin,  No.  44>  December,  1906,  p.  430, 
with  Thirty-seventh  An.  lieporl,  190G,  Mass.  Bureau  of  Statistics  of 
Labor,  pp.  279-281. 

'  Address  before  American  Association  for  Advancement  of  Science, 
December  27,  1906,  by  Heiirj'  Laurens  Call. 

'  Uunter,  op.  cit.  pp.  53-56;  Adams  and  Sumner,  op.  cii.  pp.  160- 
166. 


12  STATE  INSURANCE 

—  and  to  demonstrate  the  futility  of  all  at- 
tempts at  saving  even  with  the  highest  degree 
of  thrift.  There  are  myriads  of  wage-earners 
whom  only  the  narrowest  margin  separates 
from  bitter  want.  It  has  been  said  that  in 
Europe  in  most  cases  a  serious  accident  to  a 
workman  means  an  immediate  demand  for 
charitable  assistance  •/  and  that  in  some  local- 
ities in  England  a  snowfall  is  a  serious  calam- 
ity, as  no  provision  has  been  made  for  the 
resulting  day  of  idleness.^  There  could  un- 
doubtedly be  found  in  many  a  manufacturing 
town,  both  in  England  and  America,  families 
who  have  not  once  caught  a  glimpse  of  pro- 
sperity in  four  generations,  nor  once  been  sep- 
arated from  actual  want  by  an  interval  of 
thirty  days.  "For  commonplace  and  average 
abilities,  in  mill  and  factory,  the  cheering  pro- 
mise of  getting  free  from  an  'existence  wage' 
scarcely  exists."^ 

For  such  workmen  poverty  is  not  mere 
destitution ;  there  goes  with  it  apprehension  as 
to  the  future  —  apprehension  lest  work  shall 
cease ;  lest  sickness  or  accident  may  befall  for 
which  surgical  or  medical  aid  shall  be  lacking ; 
lest  death  may  come  leaving  wife  and  children 
destitute.  For  such  there  are  days  of  unremit- 
ting toil  and  nights  of  physical  weariness  in- 

*  W.  F.  Willoughby,  Workingmen's  Insurance,  p,  11. 
'  Blackley,  Thrift  and  Independence,  p.  11. 
'  J.  G.  Brooks,  Social  Unrest,  p.  92. 


THE  PROBLEM  13 

vaded  by  ceaseless  anxiety.  There  goes  with 
poverty,  too,  the  consciousness  of  the  loss  of  * 
dignity  and  manhood;  the  knowledge  that 
there  is  left  no  capacity  to  make  the  contract 
for  labor  except  on  unequal  terms.  They 
must  accept  whatever  conditions  may  be  im- 
posed, if  not  in  a  spirit  of  resignation,  with  the 
mute  passiveness  of  the  beast  of  burden,  trans- 
formed not  by  the  siren  of  hope  but  by 
despair. 

There  is  a  feeling,  too  general,  that  poverty 
and  pauperism  are  the  results  mainly  of  in- 
temperance and  improvidence,  and  we  some- 
times think  that  we  see  in  them  a  sort  of 
retributive  justice.  Statistics  both  in  England 
and  America  would  seem  to  indicate  that  only 
a  small  part  of  existing  pauperism  is  traceable 
to  intemperance,  —  only  about  one  seventh, 
—  while  about  three  quarters  —  seventy-two 
per  cent  —  is  attributable  to  misfortune.*  As 
to  improvidence,  it  is  undoubtedly,  to  some 
extent,  both  the  cause  and  consequence  of 
poverty,  but  obviously  there  must  be  some- 
where in  the  scale  of  poverty  and  of  earnings 
a  condition  where  saving  or  provision  for  the 
future  is  impossible ;  the  present  need  may  be 
so  constant  and  so  imperative  as  to  preclude 
all  thought  of  the  future.  Budgets  have  some- 

*  Charles  Booth,  in  London  Statistical  Society,  liv,  CIO;  A.  G. 
Warner,  American  Chariiies,  p.  46,  and  Table  VUI. 


14  STATE  INSURANCE 

times  been  published  showing  the  expendi- 
tures of  laboring  men.*  Even  when  they  con- 
cern the  wages  of  the  comparatively  well-to- 
do  wage-earners,  they  furnish  eloquent  and 
pathetic  refutation  of  the  theory  that  thrift 
would  cure  all  of  the  ills  of  workmen. 

The  figures  and  estimates  referred  to  tend 
to  show  the  inadequacy  of  wages,  tested  by 
the  period  of  health  and  capacity ;  but  it  would 
be  sufficient  for  the  purposes  of  this  discussion 
to  show  that  the  lifetime  wage  is  not  adequate 
for  the  whole  life,  or  even,  whatever  the  view 
of  the  sufficiency  of  the  wage,  that  out  of  it  no 
provision  can  be  made  for  the  future  if  indi- 
vidual effort  is  the  sole  reliance.  It  would 
seem  reasonable  to  expect  certain  indirect 
consequences  of  a  defective  wage  system,  or 
inadequate  wages  long  continued,  in  a  lack  of 
thrift  resulting  from  a  sense  of  helplessness, 
gradual  loss  of  efficiency,  diminished  self- 
respect,  lower  standards  of  responsibility  to 
society,  in  a  word,  deterioration  in  manhood. 

Without  going  into  the  matter  in  detail,  it  is 
material  to  note  the  extent  of  poverty  among 
workmen  in  its  various  forms.  It  is  not  pos- 
sible to  give  definite  figures,  nor  is  it  necessary 
for  our  purpose;  but  the  investigations   of 

*  Mass.  Bureau  of  Labor  Statistics,  Sixth  An.  Report,  1875,  pp. 
221-35-t;  B.  S.  Rountree,  Poverty,  a  Study  of  Town  Life  (York, 
Eng.),  ch.  viii;  Mrs.  L.  B.  More,  Wage-Earners'  Budgets  (New  York 
City);  U.  S.  Depart,  of  Labor,  18th  Report,  1903,  pp.  26^-285. 


THE  PROBLEM  15 

many  competent  observers  do  not  lead  to 
radically  different  conclusions.  It  is  said  that 
more  than  one  half  of  the  families  of  the  coun- 
try, and  nine  tenths  of  those  in  the  cities  and 
industrial  communities,  are  propertyless ;  that 
in  a  group  of  States  including  Massachusetts 
one  fifth  are  in  poverty ;  ^  that  one  twentieth 
are  paupers ;  ^  that  one  eighth  of  the  families 
hold  seven  eighths  and  one  per  cent  over  one 
half  of  the  property  of  the  country ;  ^  and  that 
seventy-one  per  cent  of  the  people  hold  but 
five  per  cent  of  the  wealth ;  *  that  one  eighth  of 
the  families  receive  over  one  half  of  the  total 
income,  and  that  two  fifths  of  the  better-paid 
laborers  receive  more  than  the  remaining 
three  fifths.^  These  figures  seem  especially 
important  when  we  are  assured  on  high 
authority  that  "the  tendency  of  purely  eco- 
nomic forces  is  to  widen  the  differences  exist- 
ing in  industrial  society,""  and  that,  "unequal 
as  is  the  distribution  of  wealth  already,  the 
tendency  of  industrial  progress  —  on  the  sup- 
position that  the  present  separation  between 
industrial  classes  is  maintained  —  is  toward  a 
greater  inequality  still."  ' 

'  Hunter,  op.  cit.  pp.  43,  60. 

*  R.  T.  Ely  in  North  American  Review,  clii,  398. 

■  C.  B.  Spahr,  Present  Distrilmtitm  of  Wealth  in  the  U.  S.  p.  69. 

*  G.  K.  Holmes  in  Political  Science  Quarterly,  viii,  593 ;  R.  T.  Ely, 
Society  and  Social  Relief,  pp.  27:2-275. 

'  Spahr,  op.  cit.  pp.  liS,  1-29.  "  Walker,  op.  cit.  p.  166. 

*  J.  E.  Caimes,  Political  Economy  (Harper,  187-i),  p.  iS5. 


16  STATE  INSURANCE 

Too  frequently  the  dazzling  splendor  of 
great  wealth  blinds  our  eyes  to  the  real  signi- 
ficance of  the  signs  of  the  times,  and  we  think 
we  see  evidences  of  great  national  prosperity 
in  those  very  phenomena  which  really  indicate 
social  injustice  —  a  condition  where  the  man 
who  toils  is  invited  to  bask  in  the  reflected 
warmth  and  light  of  another's  prosperity.  We 
are  easily  misled,  too,  by  figures  which  are 
offered  to  demonstrate  especially  the  well- 
being  of  the  laboring  classes,  as  those  show- 
ing savings-bank  deposits.  In  Massachusetts 
there  would  seem  to  be  an  average  deposit  of 
about  $300.  Even  this  amount  would  consti- 
tute a  very  meagre  provision  for  the  vicissi- 
tudes of  the  future.  But  investigations  have 
shown  that,  while  far  the  largest  number  of 
depositors  belonged  to  the  wage-earning  class, 
they  had  relatively  a  small  share  of  the  depos- 
its; that  the  deposits  of  thirteen  fourteenths 
of  the  whole  number  were  but  slightly  larger 
than  those  of  the  remaining  fourteenth;  that 
in  a  typical  bank  the  average  deposits  of 
wage-earners  was  less  than  $75.^  It  does  not 
go  far  towards  indicating  the  prosperity  of  the 
laboring  classes  to  show  that  the  more  thrifty 
or  the  more  fortunate  of  them  have  accumu- 
lated a  fund  which  thirty  days  of  illness  or  en- 

1  Mass.    Bureau  of  Labor  Statistics,  Third  Annual  Report,  pp. 
304,  313,  318,  and  325;  also  Fourth  Annual  RepoH,  p.  192. 


THE  PROBLEM  17 

forced  idleness  might  consume.  As  a  matter 
of  fact,  deposits  in  savings  banks  seem  to  be 
made  up,  first,  of  the  investments  of  well-to-do 
people,  making  a  very  large  part  of  the  aggre- 
gate; certain  funds  in  transit,  awaiting  other 
investment  or  accumulating  for  a  specific 
purpose;  and,  to  a  relatively  small  extent,  of 
the  slow  savings  of  those  wage-earners  who 
are  more  thrifty,  more  fortunate,  less  bur- 
dened, or  better  paid  than  their  fellows. 

But  the  matter  cannot  be  treated  merely 
from  the  standpoint  of  the  individual.  Whether 
one  of  its  members  shall  become  dependent  or 
not  deeply  concerns  society;  pauperism  and 
the  various  degrees  of  poverty  affect  the  body 
politic.  Even  if  we  look  upon  them  as  forms 
of  retribution  for  improvidence,  intemperance, 
and  vice,  we  cannot  forget  that  the  victim 
does  not  bear  his  burden  alone.  The  state 
must  provide  the  reserve  which  is  lacking. 
Moreover,  pauperism  is  something  more  than 
a  burden  imposed ;  it  is  social  disease,  radical, 
contagious,  and  hereditary.  Its  ranks  are  con- 
tinually supplied  from  above,  and  every  acces- 
sion suggests  a  possible  horde  of  Ishmaels  or 
Jukes.  There  are  the  propertyless,  living  in 
some  degree  of  comfort,  but  barely  making 
each  month's  earnings  supply  the  month's 
necessities;  the  victims  of  poverty,  who  con- 
stantly feel  the  bitterness  and  sting  of  want; 


18  STATE  INSURANCE 

the  paupers  clinging  like  parasites  to  society. 
The  transition  downward  is  easy;  the  pro- 
pertyless  are  on  the  verge  of  poverty  and  those 
in  poverty  on  the  verge  of  pauperism.  The 
situation  is  so  precarious  that  a  slight  misfor- 
tune —  enforced  idleness,  a  serious  accident, 
illness  or  the  death  of  the  wage-earner  —  may 
start  the  unwilling  victim  on  the  downward 
course.  But  from  the  lowest  stage,  pauperism, 
there  seems  to  be  no  return.  The  pauper  is  the 
victim  of  poverty  who  surrenders,  and  when 
he  surrenders  the  capitulation  is  abject,  ab- 
solute, and  unconditional;  having  acquired 
the  hated  badge,  he  is  content  to  wear  it  for 
life  and  to  bequeath  it  to  his  children.  The 
disease  of  pauperism  has  been  aggravated 
through  mischievous  theories  and  practices, 
often  by  the  very  remedies  which  were  pre- 
scribed for  its  cure.  The  gamut  of  experi- 
ments in  dealing  with  the  evil  has  been  run. 
The  pauper  has  at  one  time  been  the  peculiar 
object  of  Christian  solicitude,  and  those  able 
to  contribute  to  his  relief  have  been  threat- 
ened with  the  displeasure  of  the  Church  for 
refusing;  at  another  stage  he  has  been 
branded,  delivered  over  to  slavery,  even  put  to 
death,  under  English  law.  For  three  hundred 
years,  since  the  Poor- Law  of  Elizabeth,  Eng- 
lish-speaking people  have  adhered  to  methods 
which  were  admitted  to  be  unscientific  and 


THE  PROBLEM  19 

inefficient.  The  opinion  was  expressed  after  a 
trial  of  two  hundred  years  that,  if  the  poor- 
laws  had  never  existed  in  Great  Britain,  the 
aggregate  of  happiness  among  the  common 
people  would  have  been  much  greater,  and 
that  they  had  very  decidedly  lowered  the 
wages  of  the  laboring  classes  and  made  their 
condition  essentially  worse.*  And  as  to  the 
conditions  which  tend  toward  pauperism  it 
has  been  said  that  **the  extremes  of  wealth 
and  poverty  were  less  widely  separated  six 
centuries  ago.  .  .  .  The  grinding,  hopeless 
poverty  under  which  existence  may  just  be 
continued,  but  when  nothing  is  won  beyond 
bare  existence,  did  not,  I  am  convinced,  char- 
acterize or  even  belong  to  mediaeval  life."  ' 
But  however  well  satisfied  we  may  be  with  the 
management  of  the  problem  of  pauperism, 
the  burden  has  been  very  great  at  all  times.  In 
mediaeval  times  one  third  of  the  tithes  was 
deemed  necessary  for  the  support  of  the  poor. 
During  eras  of  great  industrial  depression  in 
England  the  fear  has  arisen  that  the  expense 
might  consume  all  of  the  revenues  of  the  king- 
dom. Even  to-day  the  burden  in  England  and 
America  is  a  heavy  one  and  perhaps  not  ma- 
terially diminishing.  At  least  the  cost  would 
seem  to  be  increasing.    The  cost  in  Great 

•  Malthus  (Murray,  1817).  ii,  338,  369. 

'  J.  E.  T.  Rogers,  Six  Centuries  of  Work  and  Wages,  pp.  414,  415. 


20  STATE  INSURANCE 

Britain  in  1880  was  about  $40,000,000;*  in 
1897  it  was  $00,000,000  ;=  and  in  1905  it  was 
$82,000,000.^ 

As  definite  figures  cannot  be  given  for  the 
United  States.  Estimates  have  been  made, 
based  upon  a  population  of  60,000,000.'  With 
a  population  of  80,000,000  it  would  not  seem 
extravagant  to  place  the  cost  to-day  at  up- 
wards of  $100,000,000.  But  these  figures 
represent  only  a  fraction  of  the  real  direct 
cost  of  maintaining  the  poor  and  dependent. 
The  multiform  expenditures  of  private  char- 
ity; the  endowments  of  hospitals  and  homes 
for  the  poor,  the  infirm,  the  sick,  the  aged; 
funds  dispensed  through  the  agency  of 
churches,  salvation  armies,  and  semi-bene- 
volent societies ;  contributions  made  at  street- 
corners  of  cities  and  in  response  to  solicita- 
tions from  door  to  door ;  the  promiscuous  giv- 
ing everywhere  without  investigation,  system, 
or  record,  —  these  probably  constitute,  in  the 
aggregate,  a  larger  item,  perhaps  many  times 
larger,  than  that  which  is  represented  by  poor- 
rates. 

We  are  wont  to  look  upon  such  facts  and 
figures  either  with  complacency  or  a  sense  of 

^  Lord  Carnarvon,  in  Nineteenth  Century,  viii,  385. 

*  Mulhall,  1898. 

'  Statesman's  Year-Bool;  1907. 

*  F.  B.  Sanborn,  quoted  in  Bliss,  Cyclopcrdia  of  Social  Reform, 
ed.  of  1898,  p.  981 ;  R.  T.  Ely,  North  American  Review,  clii,  598. 


THE  PROBLEM  21 

helplessness ;  to  conclude  that  they  are  largely 
the  result  of  ever-recurring,  inevitable,  and 
remediless  contentions  between  labor  and 
capital,  or  that  poverty  and  pauperism  are 
hopelessly  involved  with  the  thriftlessness, 
improvidence,  or  vices  of  certain  classes.  We 
discern  in  the  phenomena  no  defects  in  sys- 
tems of  jurisprudence,  no  need  of  a  readjust- 
ment of  industrial  relations  or  of  a  revision  of 
our  conceptions  of  social  obligation.  We  think 
we  have  performed  our  civic  and  Christian 
duty  fully  in  the  payment  of  poor-rates  and 
our  response  to  the  calls  of  charity. 

But  we  must  reach  one  of  two  conclusions, 
—  either  that  a  large  class  of  wage-earners 
receive  a  wage  that  is  not  sufficient  to  enable 
them  to  make  provision  for  the  future,  or  that 
they  fail  to  make  such  provision  through  lack 
of  thrift  and  foresight.  In  one  case,  they  suf- 
fer grave  injustice;  in  the  other,  they  wrong 
society  by  wasting  the  reserve  which  should  be 
accumulated  and,  in  the  time  of  need,  rely 
upon  the  prudent  and  thrifty.  In  the  former 
case,  it  may  be  claimed  that  society  recom- 
penses them  through  the  various  forms  of 
relief ;  this  would  be  equivalent  to  saying  that 
restoration  is  made  to  them  in  the  dole  of 
charity  of  that  which  has  been  taken  from 
them  by  a  sort  of  institutional  robbery.  But 
even  if  the  fault  is  entirely  that  of  the  wage- 


22  STATE  INSURANCE 

earner,  the  problem  of  finding  some  system 
wiser,  more  practical,  and  more  scientific 
than  the  present  would  remain ;  we  ought  to 
look  for  some  disposition  of  the  burden  less 
odious  to  the  recipient,  less  onerous  to  soci- 
ety, even  if  our  efforts  result  in  compelling  the 
thriftless  wage-earner  to  provide  for  a  rainy 
day. 

It  is  highly  profitable  to  investigate  and  dis- 
cuss industrial  conditions  from  the  standpoint 
of  justice  to  the  workman ;  to  inquire  whether 
he  is  receiving  his  rightful  share  of  the  product 
of  the  mill  or  factory,  or  whether  he  is  forced 
by  some  economic  law  which  he  does  not  un- 
derstand to  leave  behind  him  something  that 
is  his  by  right  of  creation.*  But  the  concern  of 
society  as  such  is  to  be  emphasized.  To  its 
care  has  fallen  a  large  portion  of  poverty  and 
pauperism  with  their  measureless  sequelae.  It 
has  carried  the  burden  without  due  apprecia- 
tion of  its  nature  or  its  weight,  but  with  never- 
ceasing  protest.  It  should  consider  whether  it 
may  not  be  alleviated,  perhaps  in  the  near  fu- 
ture removed.  *'If  such  preventive  organiza- 
tions covered  the  whole  field  of  industry,  and 
if  personal  thrift  were  developed  to  the  point 
at  which  laborers  did  their  own  saving  instead 
of  paying  large  sums  to  do  their  saving  for 
them,   the  need  for  providing  relief  would 

'  J.  B.  Clark,  Distribuiion  of  Wealthy  p.  9. 


THE  PROBLEM  23 

almost  disappear."  *  Society  has  here  a  pro- 
blem of  great  importance.  It  must  solve  it  with 
reference  to  all  of  its  phases,  social,  eco- 
nomic, industrial,  and  ethical. 

We  live  in  a  progressive  age.  The  initiation 
of  social  experiments  and  the  triumphs  of  so- 
cial legislation  are  proclaimed  to  the  whole 
world.  If,  through  our  apathy  and  inertia,  we 
sin,  we  sin  under  the  clearest  light  that  has 
ever  shone  upon  the  paths  of  men.  We  may 
not  assume,  even  plausibly,  that  our  social  and 
industrial  problems  are  essentially  different 
from  those  which  to-day  confront  every  civil- 
ized nation.  These  problems  are  virtually  the 
same,  whether  under  a  democracy  or  under  a 
monarchy.  Everywhere  poverty  is  squalid  and 
debasing,  and  riches  are  sordid  and  debasing ; 
everywhere  the  relations  of  capital  and  labor 
are  similar,  and  there  is  a  similar  social  dis- 
quietude over  real  or  fancied  grievances; 
everywhere  there  is  the  same  gulf  between 
luxury  and  penury,  the  same  resentment 
towards  the  arrogance  and  pretensions  of 
privilege  and  power. 

Nor  can  we  intelligently  hope  that,  in  some 
mysterious  way,  democracy  will  tend  auto- 
matically to  cure  industrial  evils  or  to  solve 
industrial  problems.  Rather  should  we  bear 
in  mind  that,  from  the  industrial  point  of 

1  E.  T.  Devine,  Principles  of  Relief,  p.  S34. 


24  STATE  INSURANCE 

view,  democracy  has  not  yet  been  achieved. 
Men  are  frequently  under  the  domination  of 
industrial  conditions  which  inexorably  over- 
ride statutes,  constitutions,  and  bills  of  rights. 
Unless  the  workman  can  negotiate  on  equal 
terms  for  his  labor,  —  the  only  commodity 
which  he  ever  has  to  offer  in  the  world's 
markets,  —  unless  there  is  contractual  equal- 
ity, mere  political  equality  may  be  a  mockery 
and  a  delusion;  his  political  rights  may  even 
be  surrendered  as  a  part  of  the  consideration 
in  the  contract  for  labor.  But  through  sane 
social  legislation,  based  upon  principles  of 
equity  and  equality,  we  may  gradually  ad- 
vance towards  real  democracy.  When  we  once 
begin  to  see  the  reality  we  shall  never  again  be 
satisfied  with  the  phantasm. 


II 

THE  FUNCTIONS  OF  A  STATE 

It  is  not  proposed  here  to  enter  upon  any 
general  discussion  of  the  nature,  sphere,  or 
end  of  the  state,  but  to  consider  briefly  some 
of  the  functions  of  a  state  as  bearing  upon  our 
subject;  to  consider  whether  the  experiences 
—  not  to  say  experiments  —  of  civilized  na- 
tions, including  our  own,  may  not  furnish  us 
with  some  light  and  guidance. 

The  boundaries  of  what  may  be  termed  so- 
cial legislation  cannot  be  deemed  as  definite  or 
as  having  any  degree  of  permanency.  The 
laws  and  institutions  of  the  state  challenge 
frequent  scrutiny.  Changing  conditions  of 
industry  or  of  society,  more  enlightened  con- 
ceptions of  government,  may  call  for  radical 
changes  in  the  attitude  of  the  state  towards 
the  individual,  and  laws  in  which  there  has 
been  general  and  long-continued  acquiescence 
may  be  found  inadequate  or  even  founded 
originally  upon  theories  which  no  longer  seem 
tenable. 

The  modern  state,  in  its  legislation,  pursues 
its  course  somewhere  between  the  extremes  of 
individualism  and  socialism.  The  very  con- 
ception of  a  state  as  organized  society  involves 


26  STATE  INSURANCE 

the  idea  of  law  which  shall  restrain  or  compel, 
shall  interfere  with  the  freedom  of  the  indi- 
vidual for  ethical,  economic,  social,  or  other 
ends.  No  one  would  go  to  the  extreme  of 
individualism.  We  are  all  socialists,  perhaps 
paternalists,  although  the  term  paternalism 
seems  inapplicable  in  a  democracy.  The  citi- 
zen says  Vetat  c'est  moi;  he  does  not  abdicate 
or  surrender,  he  merely  delegates.  He  does 
not  call  upon  the  state  as  a  child  upon  a  father, 
but  rather  as  a  master  upon  a  servant ;  in  his 
collective  capacity,  he  commands  it  to  do  his 
will  —  to  do  that  which  it  is  inconvenient  or 
impracticable  for  him  to  do  in  his  individual 
capacity.  The  members  of  a  community  find 
that  many  desirable  ends  can  be  accom- 
plished only  through  collective  agencies.  The 
individual  cannot  educate  his  child,  provide 
suitable  avenues  of  communication,  protect 
himself  against  impositions  and  frauds  in  food 
and  drugs  which  endanger  health  or  life, 
stamp  out  disease  or  protect  himself  against  its 
contagion,  or  care  for  orphans  or  the  insane, 
for  dependents  of  many  kinds.  These  illustra- 
tions point  to  social  legislation  in  which  there 
is  substantially  universal  acquiescence  in  this 
country.  We  look  upon  the  assumption  of 
these  functions  as  inseparable  from  a  well- 
regulated  state.  Yet  the  stern  individualist 
needs  to  be  reminded  that  almost  every  step  in 


THE  FUNCTIONS  OF  A  STATE        27 

this  direction  has  met  with  the  strenuous  op- 
position of  his  class  which  has  insisted  that  it 
was  taken  in  violation  of  some  sacred  and  in- 
fallible rule  of  action.  But  to  conceive  of  a 
state  divested  of  these  and  similar  functions  is 
to  retrace  our  steps  far  back  towards  barbar- 
ism. 

The  state  should  move  cautiously  and  ten- 
tatively in  the  direction  of  experiment ;  but,  as 
the  evolution  of  the  modern  state  plainly 
shows,  it  must  move.  It  must  often  subor- 
dinate the  independence  of  the  individual  to 
the  general  good ;  it  must  work  out  many  of  its 
beneficent  purposes  by  collective  means;  it 
must  sometimes  compel  the  individual  to  do 
that  which  he  ought  to  be  willing  to  do. 

It  would  seem  that  adhesion  to  the  existing 
order  of  things  can  be  counted  upon  to  pre- 
vent hasty  and  ill-considered  legislation.  In 
fact,  there  are  no  pages  of  history  more  heart- 
rending than  those  which  tell  the  story  of 
great  industrial  wrongs  affecting  myriads  of 
men,  women,  and  children  in  Great  Britain 
and  of  the  apathy  and  immobility  of  those, 
including  statesmen,  economists,  and  philan- 
thropists, to  whom  the  situation  ought  to  have 
appealed  irresistibly.  To  the  cry  of  children 
robbed  of  childhood  and  of  women  robbed  of 
womanhood  her  great  statesmen  solemnly 
replied,  laissez  jaire.    The  facts  elicited  and 


28  STATE  INSURANCE 

proclaimed  by  Peel  and  others  as  early  as 
1802  would  have  awakened  the  sympathy  of 
savages.  One  would  say  that  the  ethical  sense 
of  the  nation  ought  to  have  been  stirred  to 
thorough  and  instant  action.  Yet  forty  years 
afterwards,  during  which  the  subject  had  been 
kept  constantly  before  the  public  mind 
through  frequent  parliamentary  inquiries  and 
through  the  efforts  of  a  few  individuals,  — 
ostracized  for  their  zeal  and  humanity,  —  it 
could  be  said  conservatively  that  a  state  of 
things  existed  "which  could  scarcely  be  paral- 
leled by  any  of  the  barbarous  practices  which 
contributed  to  make  negro  slavery  so  abhor- 
rent." ^  But  England,  self-complacent,  inert, 
mindful  of  the  awful  perils  of  paternalism,  re- 
mained passive.  Proposals  to  restrict  the  evils 
met  with  the  most  bitter  class  opposition ;  ^ 
those  pecuniarily  interested  "were  convinced 
that  national  prosperity  and  their  own  profits 
must  rise  and  fall  together  " ;  ^  and  the  legis- 
lation suggested  was  denounced  as  an  imper- 
tinence, as  an  unwarranted  interference  with 
the  right  of  manufacturers  to  regulate  their 
own  affairs,  as  a  menace  to  England's  pro- 
sperity and  her  commercial  supremacy.  "It 
took  twenty-five  years  of  legislation  to  restrict 

^  Kni^Ht,  History  of  England,  viii,  395. 

^  Lecky,  History  of  England  in  the  Eighteenth  Century,  vi,  226. 

*  Hutchins  and  Harrison,  History  of  Factory  Legislation,  p.  19. 


THE  FUNCTIONS   OF  A  STATE        29 

a  child  of  nine  to  sixty-nine  hours  per  week."  ' 
And  "it  took  seventy-five  years  to  ascertain 
that  the  factory  acts,  instead  of  weakening, 
had  strengthened  her  in  the  world's  rivalry."  ^ 

As  another  illustration,  public  education  in 
Great  Britain  encountered  the  strenuous  op- 
position of  every  individualist.  As  late  as  1870 
she  was  pronounced  behind  every  other  na- 
tion of  the  world  in  this  regard,  centuries  be- 
hind Prussia.  '*  The  idea  prevailed  that  edu- 
cation conducted  by  the  state  would  be  some- 
thing un-English ;  something  which  might  do 
very  well  for  Germans  and  Americans  and 
other  such  people,  but  which  was  entirely  un- 
suited  to  the  manly  independence  of  the  true 
Briton."  ^  These  objections  were  not  limited 
to  the  ignorant  and  thoughtless,  but  were  ad- 
vanced by  England's  most  eminent  statesmen 
and  had  the  cordial  sympathy  of  the  Queen. 

But  we  need  not  go  so  far  for  an  instance, 
to  which  fuller  allusion  is  made  elsewhere, 
showing  the  painfully  slow  working  of  the 
public  mind  as  evinced  in  legislation.  About 
seventy  years  ago  a  doctrine  was  announced 
almost  simultaneously  by  the  courts  of  Eng- 

*  Hutchins  and  Harrison,  crp.  cit.  p.  21.  The  State  of  Illinois 
limits  children  of  sixteen  to  eight  hours  per  day. 

'  Traill,  Social  England,  vi,  825;  A.  G.  Wamer,  American  Chari- 
ties, p.  18. 

«  J.  McCarthy,  History  of  Onr  Oim  Times,  iv,  289,  290;  Lccky, 
History  of  England  in  the  Eighteenth  Century,  vi,  270. 


30  STATE  INSURANCE 

land  and  America  concerning  the  right  of 
workmen  to  recover  damages  from  employers 
for  a  certain  class  of  injuries  suffered  in  the 
course  of  their  employment.  It  was  almost 
instantly  recognized  by  thoughtful  men  that 
the  doctrine  would  work  flagrant  injustice. 
The  menace  of  these  decisions  was  so  grave 
that  it  would  have  been  quite  justifiable  if 
every  legislature  where  the  doctrine  was  to 
become  applicable  had  been  instantly  con- 
vened to  counteract  their  effect  by  appropriate 
laws.  The  doctrine  was  so  hopelessly  wrong 
that  it  was  said  in  the  parliamentary  discus- 
sions in  England  in  1893  and  1897  that  there 
was  hardly  a  reputable  lawyer  in  England 
who  would  defend  it ;  *'  not  so  much  as  a  single 
employer  rose  in  his  place  to  give  it  a  decent 
burial";  *' there  is  no  one  so  poor  as  to  do  it 
reverence."  ^  During  that  long  interval  there 
have  been  almost  daily  illustrations  in  the  in- 
dustrial world  of  the  great  injustice  of  the 
law;  there  have  been  legislative  and  parlia- 
mentary committees  and  commissions  with- 
out number,  accumulating  a  mass  of  facts  all 
tending  in  one  direction;  there  have  been 
opinions  of  economists,  philanthropists,  and 
statesmen  of  almost  unanimous  import;  the 
doctrine  has  been  abrogated  wherever  it  had 
gained  a  foothold  and  is  no  longer  in  force  in 

^  Asquith,  Hansard  (1897),  xlviii,  752. 


THE  FUNCTIONS  OF  A  STATE        31 

any  civilized  land  outside  of  the  United  States. 
Yet  we  find  here  solemn  and  protracted  hear- 
ings before  legislative  committees  to  consider 
the  question  as  though  it  had  not  been  au- 
thoritatively settled  for  all  except  the  extreme 
laggards  in  the  march  of  human  progress. 

These  illustrations  are  adduced  for  the 
purpose  of  suggesting  that  there  is  far  greater 
danger  of  a  tardy  recognition  of  the  necessity 
for  action  on  the  part  of  the  state  than  of  its 
rashly  assuming  functions  of  a  questionable 
nature.  Looking  retrospectively  at  many  social 
reforms  which  have  engaged  public  attention 
for  decades  and  even  generations,  we  should 
say  they  ought  to  have  been  accomplished 
in  a  single  session  of  a  legislature  or  parlia- 
ment and  without  any  opposition  from  in- 
telligent men.  Each  generation,  studying  its 
predecessors,  is  amazed  at  the  tardy  appre- 
hension of  what  seem  to  be  the  most  obvious 
truths.  In  the  economic,  as  well  as  in  the 
physical  world,  facts  which  seem  to  lie  within 
the  scope  of  ordinary  observation  are  concealed 
for  centuries  and  when  announced  fall  upon 
incredulous  and  hostile  minds.  A  call  for 
advanced  social  legislation  often  strikes  the 
public  ear  like  the  voice  of  a  Copernicus  or 
a  Galileo.  To  such  an  extent  do  old  theories 
and  prepossessions  dominate  all  of  our  con- 
ceptions. 


32  STATE  INSURANCE 

Meantime  the  world's  progress  along  the 
lines  of  wider  governmental  activity  would 
seem  to  discredit  the  stock  objections  of  the 
extreme  individualist.  His  predictions  and 
apprehensions  for  the  last  two  hundred  years 
seem  ridiculous  in  the  light  of  experience.  It 
is  noteworthy  that  while  there  has  been  a 
constantly  growing  tendency  to  broaden  the 
functions  of  the  state,  there  is  seldom  a  dis- 
position to  recede.  The  natural  conservatism 
of  men,  the  tenacity  of  conventional  beliefs 
and  traditions  seem  to  give  constant  assur- 
ance that  governments  are  not  given  to  enter- 
ing upon  visionary  projects. 

One  feature  of  the  opposition  to  the  legisla- 
tion proposed  is  worthy  of  notice.  The  fear  is 
expressed  that  it  would  prove  to  be  paternal- 
istic class  legislation  of  a  mischievous  form. 
The  apprehension  seems  to  come  largely  from 
those  who  are  already  recipients  of  the  benefits 
of  paternalistic  laws  in  their  most  odious  form. 
*'  Our  magnates  of  industry  have  not  preached 
paternalism,  but,  in  season  and  out  of  sea- 
son, they  have  practiced  it.  They  have  prac- 
ticed it  so  long  and  so  openly,  and  with  such 
conspicuous  profit  to  themselves,  that  it  is 
grotesque  drollery  for  them  to  cry  out  against 
paternal  legislation."  ^ 

After  the  Great  Pestilence  in  England  the 

^  J.  G.  Brooks,  Social  Unrest,  p.  46. 


THE  FUNCTIONS  OF  A  STATE         33 

Statute  of  Labourers  was  strenuously  insisted 
upon  because  the  demand  for  higher  wages 
tended  to  "the  damage  of  the  great  men,"  ^ 
and  to  "the  impoverishing  of  gentlemen." 
For  centuries  it  remained,  in  some  form,  the 
law  of  the  land,  virtually  reducing  the  labor- 
ing classes  to  abject  servitude,  although  in 
distinct  violation  of  a  fundamental  principle 
of  political  economy.  It  was  demanded  and 
retained  by  the  same  class  who  hysterically 
protested  against  the  Factory  Acts  as  an  im- 
pertinent interference  with  the  freedom  of 
contract.  Those  who  have  fattened  so  long  at 
the  trough  of  privilege  that  they  have  come 
to  believe  that  they  have  acquired  vested 
rights  as  recipients  of  government  favor  obey 
a  human,  although  not  a  noble,  instinct  in 
looking  with  jealousy  and  suspicion  upon  the 
approach  of  any  who  threaten  to  become  new 
claimants. 

That  may  well  be  termed  an  odious  form 
of  paternalistic  legislation  under  which  the 
strong  are  exalted  at  the  expense  of  the  weak ; 
on  the  other  hand,  the  state  which  protects 
the  weak  against  the  strong  is  fulfilling  one 
of  its  most  sacred  and  fundamental  functions. 
Especially  should  a  democracy,  founded  upon 
the  theoretical  assumption  of  equality,  seek  to 
make  the  theory  an  actuality.    It  was  a  maxim 

»  Statute,  1S51. 


34  STATE  INSURANCE 

of  Frederick  the  Great  that  the  first  function 
of  the  state  consists  in  holding  the  balance 
between  the  classes. 

We  may  liken  the  state  to  a  host  with  all  its 
inhabitants  as  guests,  invited  to  share  the 
common  bounty  of  nature,  ample  for  all. 
It  would  obviously  be  indecorous  for  the  host 
to  show  favor  on  the  occasion,  to  prefer  one 
guest  or  one  class  over  another;  but  it  may 
reasonably  anticipate  that  some  of  these  guests 
will  be  aggressively  gluttonous  or  rapacious, 
disposed,  and,  by  their  superior  physical 
strength  or  mental  cunning,  able,  not  only  to 
devour  their  own  portion  but  to  seize  and 
pocket  the  share  of  a  neighbor,  perhaps  on 
some  claim  of  superior  prudence  or  special 
capacity  to  act  as  trustee  for  the  despoiled. 
However  abhorrent  the  idea  of  policing  the 
feast  may  seem,  especially  to  those  who  have 
predatory  instincts  and  purposes,  the  host 
may  decide  that  that  is  an  essential  feature 
of  his  hospitality  and  that  it  would  be  un- 
seemly that  some  should  go  away  with  hunger 
satisfied  and  full  pockets  while  others  are 
hungry  or  starving. 

Society,  then,  must  have  regard  for  its 
weaker  members  and  the  progressive  Christ- 
ian state  must  rest  upon  ethical  foundations. 
To  the  individualist  the  very  words  ethical 
and   social    as   applied    to  legislation  seem 


THE  FUNCTIONS   OF  A  STATE        35 

odious;  but  dogmatic  theories  as  to  law  and 
government  should  be  reexamined  wherever 
results  constantly  falsify  and  contradict  the 
theory.  All  such  theories  must  be  tested  with 
reference  to  industrial  conditions  as  they 
arise.  If  existing  laws  and  institutions  tend  to 
make  the  economically  weak  weaker  and  the 
strong  stronger,  or  to  increase  the  inequality 
between  the  weak  and  the  strong,  they  are 
radically  defective.  If,  as  many  profess  to 
believe,  in  the  industrial  world  of  to-day  the 
predatory  instincts  of  men  are  fostered,  and 
industrial  robbery  is  not  only  made  easy  but 
widely  practiced,  the  state  must  interfere.  If 
such  conditions  exist,  it  is  far  more  important 
that  it  should  act  effectively  than  that  it  should 
exhibit  a  blind  reverence  for  traditions.  There 
are  as  strong  reasons,  inherently,  for  legis- 
lating against  any  indirect  robbery  which  is 
practiced  as  the  result  of  economical  disparity 
between  the  parties  to  a  contract  as  for  pro- 
hibiting highway  robbery  or  larceny.  Either 
class  of  laws  may  fairly  be  called  socialistic 
or  paternal.  There  would  seem  to  be  no  good 
reason  why  it  is  not  as  much  a  proper  function 
of  the  state,  if  it  can  do  this  effectively,  to 
guarantee  equality  of  opportunity,  as  to  guar- 
antee political  equality. 

The  state  may  properly  inquire  into  the 
causes  of,  and  seek  to  allay,  social  unrest.    It 


36  STATE  INSURANCE 

may  consider  how  far  industrial  conditions 
contribute  to  economic  waste;  whether  some 
different  mode  of  dealing  with  a  social  pro- 
blem may  not  be  better  than  an  existing 
method ;  whether,  for  example,  it  is  better  to 
care  for  poverty  and  pauperism  or  to  seek 
to  prevent  them,  any  solution  of  the  problem 
being  essentially  socialistic.  In  dealing  with 
questions  that  arise,  it  must  have  regard  not 
merely  for  the  superficially  cheaper  method, 
but  must  seek  to  find  the  one  which  is  sound- 
est on  economic  principles  and  most  consist- 
ent with  justice  and  right. 

There  is  a  feeling  widely  prevalent,  though 
not  often  bluntly  stated,  that  it  is  legitimate 
for  the  state  to  assume  a  paternal  attitude 
toward  certain  worthy  classes,  to  enable  them 
in  turn  to  take  a  similar  attitude  toward 
others.  The  practice  of  this  theory  has  always 
wrought  untold  misery  and  wretchedness.  It 
ignores  the  essential  selfishness  of  men;  the 
divine  trusteeship  degenerates  into  a  gross 
betrayal  of  trust  for  which  there  is  no  remedy 
or  punishment. 

It  will  be  suggested  that  legislation  such  as 
is  proposed,  looking  to  state  insurance,  tends 
to  weaken  the  stand  which  the  community 
should  take  against  socialism.  Quite  natur- 
ally a  demonstration  of  the  mischievous  re- 
sults of  individualism  gives  a  broader  and  a 


THE  FUNCTIONS  OF  A   STATE        37 

keener  conception  of  social  responsibility  and 
leads  towards  social  reforms;  but  there  is  a 
wide  interval  between  rational  social  reforms 
through  legislation  and  socialism.  The  dis- 
content which  arises  from  the  working  of  un- 
just individualistic  laws  and  institutions  is 
undoubtedly  allayed  by  removing  just  causes 
of  complaint.  A  study  of  the  experience  of 
Germany  for  the  past  twenty-five  years  fur- 
nishes striking  evidence  of  this  fact.  Those 
who  would  resist  all  attempts  at  reform  in 
industrial  conditions,  lest  they  be  deemed  con- 
cessions in  the  nature  of  a  surrender,  would 
dam  higher  a  rising  stream  to  prevent  its  be- 
coming uncontrollable,  blindly  contributing 
to  the  disaster  which  must  ensue. 

It  will  also  be  said  that  social  legislation 
which  is  to  be  commended  in  a  foreign  gov- 
ernment —  in  a  monarchy  —  may  be  en- 
tirely unsuited  to  a  democracy ;  that  however 
successful  their  experiments  in  relieving  in- 
dustrial conditions,  their  example  furnishes 
no  light  for  us.  It  might  well  be  retorted  that 
a  republic  should  be  the  first  to  attempt  to 
realize  one  of  the  highest  ideals  of  real  de- 
mocracy —  the  ideal  of  industrial  equality. 
But  the  social  and  industrial  problems  which 
are  to  be  solved  by  social  legislation  are  the 
same  under  any  form  of  government.  "  Social 
legislation  is  independent  of  the  constitution 


208115 


38  STATE  INSURANCE 

of  states ;  it  is  indispensable  in  monarchies  as 
well  as  republics."  *  The  adoption  of  the  Aus- 
tralian ballot  was  delayed  two  years  in  a  cer- 
tain Western  State  by  the  suggestion,  on  the 
part  of  a  senator,  that  it  was  Asiatic!  The 
experiences  of  monarchical  governments  under 
radical  social  legislation  possibly  point  out 
a  path  that  should  be  followed  by  us  a  forti- 
ori. The  management  of  mines,  railroads,  and 
manufacturing  establishments  calls  for  the 
same  scrutiny  everywhere ;  the  questions  aris- 
ing between  employer  and  workmen,  between 
labor  and  capital,  are  not  political  but  eco- 
nomic, industrial,  social.  The  problems  of  pov- 
erty and  pauperism,  the  treatment  of  accidents, 
sickness,  and  invalidity,  as  related  to  industry, 
all  suggest  certain  social  responsibilities  call- 
ing for  the  state's  intervention  and  for  social 
legislation. 

It  must  be  remembered  that  the  assump- 
tion of  any  function  by  the  state,  like  that  of 
compulsory  public  education,  must  be  based 
upon  different,  perhaps  higher,  grounds  than 
that  of  compassion  for  a  class.  The  state  does 
not  give  education  to  the  poor  and  property- 
less  ;  it  pays  a  portion  of  its  obligation  to  them 
in  that  form,  not  only  as  a  matter  of  justice 
to  them,  but  for  the  common  weal,  even  for 
its  own  salvation. 

*  Ludwig  Lass,  German  Workmen's  Insurance,  pt.  1,  p.  5. 


THE  FUNCTIONS  OF  A  STATE         39 

The  proposition  that  the  state  should  take 
upon  itself  the  new  function  of  the  insurance, 
in  some  form,  of  its  citizens  should  be  met 
rationally ;  we  should  be  wise  enough  to  study 
without  prejudice  the  legislation  of  other 
governments  and  their  experience  under  such 
legislation ;  our  vision  should  be  clear  enough 
to  recognize  human  progress  wherever  a 
demonstration  has  been  plainly  and  conclus- 
ively made ;  we  should  distrust  our  own  con- 
clusions when  we  find  ourselves  attributing: 
indisputable  indications  of  an  advance  in 
the  well-being  of  the  laboring  classes  to  the 
superior  advantages  and  opportunities  which 
a  monarchy  enjoys. 

Traditions  and  conventions  have  their  place 
and  value;  but  they  are  too  often  the  refuge 
of  the  indolent  and  the  superficial;  of  those 
employing  cant  rather  than  argument;  too 
often,  fetishes,  blindly  worshiped. 

It  is  unwise  to  attempt  to  set  arbitrary  limits 
to  the  functions  of  the  state.  Each  proposi- 
tion for  enlarging  its  sphere  of  action  must  be 
met,  not  by  invoking  ancient  maxims  which 
deserve  to  be  relegated  to  the  junk-shop  of 
economic  cant,  but  by  an  appeal  to  history 
and  to  sound  economic  principles.  We  must 
be  mindful  of  what  has  been  accomplished  in 
the  past,  throughout  the  world,  by  sane  social 
legislation,  and  we  may  profitably  study  cer- 


40  STATE  INSURANCE 

tain  analogies.  "Baconian  legislation  will 
always  proceed  by  reasoning  from  the  most 
proximate  and  analogous  experience  which  is 
available."  *  The  points  of  analogy  between 
steps  in  legislation  already  taken  and  the  un- 
dertaking of  insurance  by  the  state  are  mani- 
fest. Even  in  the  field  of  insurance  the  state 
has  shown  a  purpose  to  supervise  and  to  con- 
trol. Much  that  is  stable  and  permanent  in 
life  insurance  to-day  is  traceable  to  the  state's 
intervention  by  way  of  direction  and  of  re- 
straint. The  field  was  an  attractive  one  for 
the  exploitation  of  the  many  for  the  benefit 
of  the  few.  A  study  of  life  insurance  in  its  early 
days  reveals  the  dangers  which  threatened  if 
it  were  to  remain  unregulated. 

The  state's  attitude  towards  pauperism 
furnishes  another  instructive  analogy.  If  the 
state  may  assume  the  parental  relation  towards 
the  pauper,  it  may  properly  consider  the 
causes  which  lead  to  pauperism ;  it  ought  to  be 
as  legitimate  a  function  of  the  state  to  seek  to 
prevent  it  as  to  attempt  to  deal  with  it  after  it 
becomes  a  dangerous  and  incurable  disease. 

But  the  rule  of  action  must  be  the  same  in 
all  legislation  which  concerns  society  as  such, 
—  the  rights  of  property,  the  independence, 
the  comfort,  or  the  convenience  of  the  indi- 
vidual must  yield  whenever  a  distinct  public 

*  W.  S.  Jevons,  State  in  Rdaiion  to  Labor,  p.  24. 


THE  FUNCTIONS  OF  A  STATE        41 

interest  is  subserved  by  an  enlargement  of 
the  function  of  the  state.  The  property  of  the 
citizen  is  held  subject  to  the  right  of  eminent 
domain;  his  acquiescence  in  that  right  con- 
stitutes a  part  of  his  allegiance  to  the  supreme 
authority.  The  right  of  the  state  to  condemn 
the  property  of  the  individual  to  public  use 
is  not  essentially  different  from  its  right  to 
compel  vaccination  or  attendance  upon  public 
schools,  or,  if  a  case  can  be  made  out,  to  com- 
pel the  insurance  of  those  whose  economic  in- 
security not  only  indicates  industrial  injustice, 
but  constitutes  a  constant  menace  to  society. 


V 


•^S^.'*: 


Ill 

STATE  INSURANCE 

In  the  preceding  chapter  the  general  attitude 
of  the  state  toward  social  legislation  has  been 
discussed  briefly.  We  are  to  consider  whether 
state  insurance  —  the  insurance,  especially 
of  workmen,  against  accidents,  sickness,  in- 
validity, and  death  —  are  within  its  proper 
and  legitimate  sphere. 

Some  of  the  tests  of  the  obligation  of  the 
state  in  this  direction  are  simple :  Would  such 
insurance  tend  to  mitigate  industrial  injust- 
ice.^ to  distribute  more  justly  and  automat- 
ically, in  a  sense,  the  product  of  labor  ?  to 
contribute  toward  contentment  among  the 
industrially  or  economically  weak  by  making 
more  nearly  equal  industrial  opportunity  be- 
tween classes  ?  Would  it  tend  to  diminish  pau- 
perism and  extreme  poverty  ?  Is  it  practicable 
or  possible  to  accomplish  fully  the  benefits 
of  insurance  by  any  individual  effort.^  Does 
society  need  some  such  measure  for  its  own 
well-being  ?  Is  it  preeminently  a  suitable  and 
legitimate  subject  for  collective  action  ? 

The  suggestion  of  government  insurance 
against  the  vicissitudes  of  life  is  not  a  new 
one;  it  has  been  agitated  for  the  past  fifty 


STATE  INSURANCE  43 

years  in  Germany,  England,  and  France. 
The  imperfection  and  inadequacy  of  all  exist- 
ing systems  and  plans  has  been  recognized. 
It  has  become  evident  to  thoughtful  men  that 
the  matter  should  not  be  left  entirely  to  private 
initiative  and  management.  It  has  become 
the  accepted  doctrine  that  such  insurance 
should  be  under  the  control  of  the  state,  as  is 
shown  by  the  appointment  of  legislative  and 
parliamentary  commissions  and  by  the  ample 
powers  conferred  upon  state  insurance  de- 
partments. 

If,  then,  it  is  objected  that  state  insurance 
would  be  paternalistic  and  socialistic,  it  must 
be  kept  in  mind  that  the  paternal  attitude 
toward  insurance  has  already  been  taken  by 
every  civilized  state  in  its  assumption  of  su- 
pervision and  control.  And  it  may  be  fairly 
claimed  that  all  insurance  is  in  its  very  nature 
socialistic.  Society,  or  a  definite  section  or 
stratum  of  society,  carries  a  burden  in  behalf 
of  its  members  which  the  individual  com- 
ponents cannot  carry.  The  peril  which  men- 
aces the  individual  fills  him  with  appre- 
hension as  an  individual,  but  he  can  look 
forward  to  meeting  his  share  of  the  danger 
as  a  member  of  society  with  complacency.  He 
does  not  seek  to  evade  a  burden  but  to  read- 
just it. 

Before  men  thought  of  making  pro\^sion 


44  STATE  INSURANCE 

for  such  events  by  contract  it  was  deemed  a 
sacred  obligation  among  them  to  provide  for 
the  victims  of  sudden  calamities,  of  accident, 
sickness,  or  death,  as  a  matter  of  humanity 
or  Christian  charity.  Whether  in  the  form 
of  written  law  or  otherwise,  there  has  been 
this  universal  sense  of  social  obligation. 

There  is  another  feature  of  the  matter 
which  must  be  considered  when  we  talk  of  the 
paternal  aspect  of  government  insurance.  A 
large  portion  of  the  poverty  and  pauperism 
which  prevails  is  traceable  to  the  misfortunes 
which  overtake  workmen,  for  which  they  have 
made  no  provision.  Precisely  how  large  a 
percentage  of  the  whole  may  be  charged  to 
these  causes  it  is  not  material  at  this  stage  to 
discuss.  A  highly  competent  authority  quoted 
elsewhere  ^  would  attribute  at  least  a  major 
portion  of  all  poverty  and  pauperism  to  the 
misfortunes  which  overtake  the  poor  rather 
than  to  fault.  But  can  any  kind  of  law  be 
more  distinctly  and  more  odiously  pater- 
nalistic than  one  which  levies  upon  the  pro- 
perty of  A  to  support  B  as  a  pauper  ?  which 
violently  takes  from  the  prosperous  to  sup- 
port the  destitute  .P  from  the  thrifty  for  the 
thriftless  ?  from  the  temperate  and  pro\adent 
for  the  intemperate  and  improvident.? 

Now  if  a  system  can  be  devised  under  which 

*  See  page  13. 


STATE  INSURANCE  45 

the  workman,  as  a  rule,  makes  provision  for 
all  of  the  ordinary  contingencies  of  the  future, 
and  whereby  society  is  relieved  of  a  large  part 
of  the  burden  of  pauperism,  we  accomplish 
a  certain  end  by  a  method  quite  dissimilar, 
while  each  method  is  distinctly  paternal.  It 
would  hardly  be  contended  that  a  law  which 
compels  one  man  to  support  another  is  to  be 
preferred  over  one  which  compels  a  man  to 
support  himself. 

The  incidence  of  charges  under  a  system 
of  government  insurance  will  be  treated  of 
elsewhere,  but  if  we  assume,  for  the  moment, 
that  all  such  charges  are  to  be  borne  by  the 
state,  it  will  be  seen  readily  that  there  is  not 
any  additional  burden  carried — only  a  burden 
in  another  form,  whether  more  or  less  odious 
or  irksome.  As  it  is  now,  without  the  finest 
discrimination,  we  pension  one  dependent  and 
send  another  to  the  poorhouse;  we  give  a 
badge  of  honor  to  the  soldier  who  has  served 
or  suffered  on  his  country's  battlefields,  but 
we  brand  with  the  stigma  of  disgrace  the 
soldier  of  industry  who  has  suffered  in  health 
or  in  limb  in  the  industrial  life  of  his 
generation.  Through  a  system  of  state  insur- 
ance it  is  proposed  that  present  methods  of 
dealing  with  a  certain  social  problem  be  re- 
placed by  something  not  more  paternalistic 
but  far  more  just;  to  readjust  certain  relations 


46  STATE  INSURANCE 

between  classes  on  more  scientific  and  more 
ethical  foundations. 

Whether,  in  the  aggregate,  the  burdens 
now  carried  by  society  on  account  of  its  un- 
fortunate, helpless  members  would  be  dimin- 
ished under  the  scheme  proposed  must  be  a 
matter  of  speculation.  It  certainly  would 
seem  reasonable  to  hope  that  under  a  system- 
atic scheme  of  insurance  against  accidents, 
sickness,  and  invalidity  there  would  be  great 
economy  compared  with  present  methods, 
admitted  to  be  wasteful  and  unscientific.  It 
would  not  be  optimistic  to  hope  for  the  gradual 
eradication  of  pauperism  and  poverty  under  a 
method  which  leaves  nothing  to  haphazard,  but 
scientifically  anticipates  the  future ;  to  look  for 
a  more  hopeful  feeling  among  the  classes  that 
find  themselves  hopelessly  drifting  towards 
poverty  and  dependence ;  to  look  for  a  great 
increase  of  thrift  when  men  themselves  see 
that  nothing  is  left  to  chance,  but  that  they, 
under  the  encouragement  of  a  definite  plan, 
are  themselves  making  provision  for  all  the 
vicissitudes  of  the  future;  to  look  for  a  dis- 
tinct access  in  true  manhood  when  the  humblest 
and  poorest  workman  realizes  that  he  is  re- 
ceiving a  reserve  of  wages  earned  and  not  the 
odious  dole  of  charity  when  vicissitudes  come. 

It  is  a  trite  saying  that  the  state  cannot 
through  legislation  compel  thrift;  to  which 


STATE  INSURANCE  47 

should  be  added  the  statement  that  the  state 
ought  to  encourage  thrift  and  should  put  no 
obstacles  in  its  way.  It  must  be  admitted  by 
all  who  study  the  subject  that  the  state  does 
often  unwittingly  encourage  thriftlessness,  and 
nowhere  more  manifestly  than  by  its  poor- 
laws  and  their  administration. 

A  system  which  would  tend  to  inspire  hope 
rather  than  despair;  which  would  practically 
banish  the  almshouse  from  the  vision  of  those 
who  are  on  the  brink  of  poverty ;  which  would 
guarantee  that  the  hard-earned  wages  of  the 
thrifty  should  not  be  levied  upon  to  support 
the  improvident;  which  would  compel  every 
industry  to  bear  its  own  burdens ;  which  would 
demonstrate  to  some  degree  by  infallible  tests 
something  as  to  the  true  share  of  labor  in  a 
given  product;  which  would  reveal  in  all  its 
nakedness  and  hideousness  that  predatory 
feature  of  many  industries  which  permits 
capital  to  rob  workmen  of  life,  limb,  or  health 
in  unhealthy  and  dangerous  employments  and 
turn  over  the  wrecks  to  the  care  of  society,  — 
a  system  which  would  promise  to  accomplish 
these  ends  or  a  part  of  them  is  worthy  the  care- 
ful attention  of  philanthropists  and  statesmen. 

Judgment  might  be  challenged  quite  con- 
fidently upon  the  proposition  that  insurance 
such  as  is  proposed  is  preeminently  within  the 
proper  functions  of  a  state.    Let  us  suppose. 


48  STATE   INSURANCE 

if  we  can,  a  civilized  state  whose  policies  have 
been  individualistic  in  the  extreme  —  a  state 
without  public  education,  public  highways, 
public  control  or  supervision  of  waterways, 
of  health,  of  sanitation ;  having  no  care  for  the 
insane  or  the  pauper;  without  a  system  of 
state  insurance  for  workmen.  Imagine  this 
state  awakening  to  a  sense  of  its  social  respon- 
sibilities and  to  the  need  of  social  legislation, 
laying  aside  its  conventional  prejudices  against 
collectivism  and  paternalism,  realizing  that 
there  are  many  ends  to  be  accomplished 
which  can  be  reached  only  by  collective  effort. 
Imagine  it  slowly,  tentatively,  but  with  intel- 
ligent discrimination,  starting  upon  its  course, 
taking  the  step  which  seems  of  all  the  most 
urgent.  Might  not  this  state  conclude  that 
there  was  no  object  more  imperative  than  the 
insurance  of  workmen ;  none  appealing  more 
strongly  to  the  paternal  solicitude  which  the 
state  should  have  for  its  weaker  members; 
none  where  the  best  efforts  of  the  individual 
would  be  so  impotent  and  ineffectual;  that 
there  was  nothing  else  within  the  sphere  of 
the  material  needs  of  men,  affecting  their  pro- 
tection, comfort,  peace  of  mind,  and  well- 
being,  for  which  collective  means  through  law 
promised  more  beneficent  results,  —  results, 
however,  which  have  never  been  fully  achieved 
without  the  intervention  of  the  state. 


STATE  INSURANCE  49 

Assuming,  then,  what  all  are  inclined  to 
admit,  that  insurance  for  workmen  through 
some  agency,  private  or  public,  is  highly  de- 
sirable, the  grounds  for  state  insurance  would 
seem  to  be  very  strong. 

As  has  been  suggested,  the  end  can  be 
achieved  only  by  some  sort  of  collective  effort ; 
the  propertyless  individual  may,  by  slow  ac- 
cumulations of  savings,  if  his  wages  admit  of 
it,  make  provision  for  old  age,  but  he  cannot 
prepare  for  the  accident,  sickness,  or  inca- 
pacity that  may  come  without  warning  to- 
morrow. He  looks  for  some  method  or  plan 
that  will  combine  scientific  accuracy,  economy 
of  management,  absolute  safety  and  security, 
and  practical  universality. 

The  individual  knows  and  can  know  prac- 
tically nothing  as  to  the  actual  risks  which 
menace  him,  judged  by  the  law  of  averages, 
or  what  it  ought  to  cost  him  to  insure  against 
any  hazard  or  class  of  hazards.  The  actuarial 
questions  involved  are  difficult  and  intricate, 
requiring  the  most  careful  weighing  of  com- 
plicated statistics.  The  state  is  best  quali- 
fied to  procure  such  statistics  with  economy 
and  accuracy  and  to  prepare  reliable  tables 
of  morbidity  and  mortality;  it  may  also  con- 
struct minute  tariff's  of  risks,  as  has  been  done 
under  German  laws.^     The  state  is  already 

*  Law  of  July  6,  1881,  spr.  28;  Konrad  Hartmann,  Das  Gefahreri' 
tarifweaen  der  Unjcdlversiclicrung  des  Deiiischen  Reichs. 


50  STATE  INSURANCE 

partially  equipped  for  such  work,  and  pro- 
cures for  other  purposes  a  considerable  por- 
tion of  the  data  required.  No  other  agency 
or  source  of  information  would  command  as 
great  confidence  as  the  bureau  of  a  well- 
regulated  state.  It  may,  too,  be  fairly  claimed 
that  the  state  is  peculiarly  adapted  to  the  ad- 
ministration of  insurance  and  the  calculations 
required,  as  they  are  largely  matters  of  mere 
mechanical  routine.^  The  workman  needs  to 
have  the  cost  of  insurance,  in  its  various  forms, 
authoritatively  stated,  and  to  procure  it  at  the 
minimum  of  cost.  Thousands  are  to-day  dis- 
suaded from  taking  insurance  because  they 
realize  that  they  must  pay  for  it  excessive 
rates.  A  competitive  system,  with  its  enormous 
reduplication  of  solicitation,  exists  at  the  ex- 
pense of  the  insured  and  bears  most  heavily  on 
those  most  needing  insurance  and  least  able  to 
bear  any  unnecessary  burdens.  The  state  can 
provide  for  insurance  at  the  very  minimum  of 
cost.  Much  of  the  work  required  could  be 
brought  under  existing  insurance  departments 
and  municipal  machinery.  There  would  be 
no  hordes  of  solicitors,  all  of  whom  must  earn 
a  living;  no  extravagantly  paid  officials;  no 
palatial  offices  or  costly  buildings;  no  cor- 
ruption funds  to  control  elections  or  legis- 
latures. 

*  John  Rae,  Contemporary  Socialism,  p.  417. 


STATE  INSURANCE  51 

There  is  no  subject  that  engages  the 
thoughts  of  men,  involving  the  payment  of 
money  or  the  investment  of  funds,  over  which 
there  is  greater  solicitude  as  to  safety  and  se- 
curity than  that  of  insurance  against  the  vicis- 
situdes of  life.  For  this  feeling  there  are  power- 
ful reasons.  Insurance  against  accidents, 
sickness,  invalidity,  and  death  concerns  the 
most  serious  and  important  aspects  of  human 
affairs.  If  the  insurer  fails  to  perform  his  part 
of  the  contract,  the  loss  may  be  irreparable  or 
worse  than  irreparable, — the  insured  may  not 
only  have  lost  the  funds  invested,  but  through 
advancing  age  or  diminished  earning  capacity 
he  may  have  become  unable  to  reinsure ;  the 
contract,  if  for  an  old-age  pension,  is  to  be 
carried  out  often  at  a  far  distant  day,  perhaps 
after  an  interval  of  fifty  years ;  if  the  contract 
is  for  life  insurance  it  is  indefinite  in  its  dura- 
tion, but  its  adjustment,  after  the  death  of  the 
insured,  must  be  effected  by  others.  But  the 
contract  of  the  state  offers  absolute  safety  and 
security;  no  incompetency,  extravagance,  or 
dishonesty  of  officials  can  impair  the  solemnity 
of  its  guaranty;  through  all  ordinary  muta- 
tions in  political  and  financial  affairs  the  state 
must  endure;  if  it  makes  a  contract  to-day 
to  be  fulfilled  in  the  far  distant  or  indefinite 
future,  the  party  interested  relies  upon  its  pro- 
mises with  serene  confidence.   The  state  may 


52  STATE  INSURANCE 

offer  this  absolute  security  without  the  accu- 
mulation of  any  reserve ;  with  the  introduction 
of  compulsion  all  necessity  for  a  reserve  disap- 
pears/ 

The  prudent  man  who  makes  provision  for 
the  future  by  accumulations  of  savings  or  by 
insurance,  and  the  taxpayer,  have  a  distinct 
interest  in  the  thrift  of  others.  They  want 
some  assurance  that  the  state  will  not  take 
from  them  by  force  a  portion  of  their  savings 
or  property  for  the  support  of  the  improvid- 
ent. No  insurance  can  be  deemed  satisfac- 
tory or  successful  which  is  not  general  in  its 
application,  viewed  either  from  the  stand- 
point of  the  individual  or  of  society.  There 
is  contagion  in  thrift  as  well  as  in  thriftless- 
ness,  and  no  system  of  insurance  can  be 
highly  successful  or  beneficent  in  its  results 
which  does  not  command  the  concurrence  of 
all.  The  fatal  weakness  of  every  system  which 
has  ever  been  devised  without  the  intervention 
of  the  state  consists  in  its  failure  to  reach  those 
for  whom  it  would  be  especially  prescribed, 
those  who  constantly  threaten  to  become  a 
public  charge  or  to  pass  a  portion  of  their  lives 
in  extreme  penury  and  wretchedness. 

Some  of  the  objections  that  are  urged 
against  government  insurance  have  been  anti- 

1  M.  M.  Dawson,  in  Encyclopaedia  of  Social  Reforms,  edition  of 
1908,  p.  634. 


STATE  INSURANCE  53 

cipated.  The  objection  that  it  would  throw 
an  intolerable  burden  upon  the  state  will  be 
touched  upon  in  the  chapter  upon  Incidence. 
It  is  sometimes  urged  as  an  important  objec- 
tion that  state  insurance  would  injure  or,  if 
made  exclusive,  ruin  existing  companies. 
This  arises  from  a  misapprehension.  Existing 
insurance  companies  or  institutions  do  not 
exist  for  their  own  sake,  but  for  the  sake  of  the 
policy-holder.  No  policy-holder  would  suffer 
harm  if  no  further  policies  should  be  issued. 
Perhaps  he  might  even  be  benefited  because 
his  accumulations  could  not  be  used  —  as 
they  often  have  been  —  to  secure  new  busi- 
ness. The  solvent  company  can  meet  all  its 
obligations  to  its  policy-holder;  beyond  that  he 
has  no  interest  unless  of  a  purely  sentimental 
nature.  It  has  been  urged,  even,  that  state 
insurance  should  be  opposed  because  it  would 
interfere  with  the  employment  of  insurance 
solicitors.  On  one  occasion,  when  the  Cana- 
dian Government  had  the  subject  under  con- 
sideration, it  was  indignantly  asked:  "Why 
should  Government  take  the  bread  from  the 
mouths  of  people  who  are  earning  their  living 
by  life  insurance  ?^'  ^  This  is  quoted  with  ap- 
proval as  a  strong  argument  against  govern- 
ment insurance,  but  it  is  too  puerile  to  waste 

*  Quoted  from  the  Toronto  Globe  by  Walford,  Insurance  Cyclo- 
posdia,  V,  491. 


54  STATE  INSURANCE 

time  over.  All  of  the  legitimate  work  of  insur- 
ance will  remain  to  be  done  under  any  sys- 
tem. Whatever  is  beyond  that  is  superfluous 
and  simply  parasitic.  Society  cannot  be  asked 
to  support  a  body  of  men  whose  labors  have 
no  real  eflSciency  and  do  not  add  to  a  desir- 
able product.  To  state  the  question  is  to  an- 
swer it. 

If  state  insurance  is  desirable,  should  it  be 
voluntary  or  compulsory.?  Compulsory  in- 
surance is  sometimes  denounced  as  though  the 
proposition  were  exceptional  in  the  consider- 
ation of  the  proper  functions  of  government. 
The  word  compulsion,  as  applied  to  legisla- 
tion, is  an  odious  one.  Why  should  the  state 
invade  the  domain  of  the  individual's  choice 
and  peremptorily  decide  how  he  shall  meet 
his  own  responsibilities  ? 

It  is  to  be  premised  that  there  is  no  com- 
pulsion upon  the  willing.  The  law-abiding 
citizen  is  not  conscious  of  any  restraint  under 
laws  against  disorder  or  crime ;  the  thoughtful 
citizen  does  not  resent  the  regulations  which 
require  him  and  his  neighbors  to  do  that 
which  they  should  cheerfully  unite  in  doing 
for  the  common  good.  We  are  accustomed  by 
the  long  practice  of  civilized  nations  to  a  great 
variety  of  laws  which  are  made  obligatory  for 
the  benefit  of  all.  We  have  compulsory  edu- 
cation, compulsory  sanitary  and  quarantine 


STATE  INSURANCE  55 

regulations,  compulsory  requirements  respect- 
ing the  spread  of  noxious  insects  and  plants, 
compulsory  contributions  for  the  support  of 
the  poor.  These  all  rest  lightly  on  the  orderly 
and  patriotic  citizen ;  rather  he  looks  upon  the 
state  as  highly  beneficent  which  secures  to  him 
all  of  the  privileges  which  can  be  secured  only 
by  establishing  uniformity  of  action  by  law  for 
the  general  weal.  He  does  not  feel  the  tyranny 
of  law,  but  realizes  his  ideals  of  liberty  which 
can  be  gained  only  under  law.  He  complies 
with  laws  in  the  consciousness  that  all  of  his 
neighbors,  including  the  exceptional  one  who 
is  unwilling,  are  doing  the  same  in  the  inter- 
ests of  orderly  government.  He  knows  how 
impotent  he  would  be  alone  or  even  with  the 
unorganized  concurrence  of  his  fellows  in 
gaining  these  valuable  results.  We  think  of 
compulsion  as  a  sort  of  tyranny,  but  it  can 
only  be  the  tyranny  of  a  majority  in  a  repub- 
lic. This  may  be  odious,  but  less  so  than  the 
tyranny  of  a  minority.  A  minority  despicable 
in  point  of  numbers,  five  per  cent  or  two  per 
cent  of  a  community,  may  by  mere  inertia 
impose  its  will  upon  the  majority  as  long  as 
the  will  of  the  majority  is  not  enacted  into 
law.  The  state  should  not  invoke  compulsion 
for  trivial  reasons;  but  when  large  interests 
are  involved,  concerning  the  welfare  of  the 
greater  portion  of  its  inhabitants,  and  a  desired 


66  STATE  INSURANCE 

end  can  be  accomplished  only  through  com- 
pulsion, it  ought  not  to  hesitate. 

Is  the  insurance  of  workmen  of  such  import- 
ance and  urgency  as  to  justify  compulsion  on 
the  part  of  the  state  to  secure  it  effectively? 
Such  insurance  cannot  be  made  general  in  its 
application  without  compulsion.  No  form  of 
persuasion  could  be  effectively  employed  by 
the  state  which  would  not  involve  features  far 
more  objectionable  than  compulsion.  As  long 
as  any  scheme  is  entirely  voluntary  it  will  be 
evaded  by  the  person  and  the  class  who  most 
need  insurance;  the  evasion  of  one  would 
weaken  those  nearest  him  socially  and  the 
contagion  of  improvidence  would  spread  to 
the  thrifty.  Any  plan  for  state  insurance, 
purely  voluntary,  would  show  in  its  operation 
the  same  defects  which  make  all  existing 
insurance  institutions  unsatisfactory.  But  it 
might  be  confidently  expected,  even  if  there 
had  been  no  demonstration  of  the  fact  else- 
where, that  compulsory  insurance,  when  fully 
understood  and  appreciated,  would  result  in 
the  ready  acquiescence  of  those  concerned,  as 
has  been  the  result  in  the  case  of  many  other 
obligatory  laws.  Only  the  exceptional  man 
would  chafe  under  the  compulsory  feature.  It 
would  hardly  be  compulsory  except  in  name. 
It  is  impracticable  for  the  state  in  its  legisla- 
tion to  consider  the  one  man  who  is  abnormal 


STATE  INSURANCE  57 

and  must  be  forced  to  do  that  which  the  other 
ninety-nine  do  gladly.  If  he  were  to  be  heard 
we  should  have  no  public  education  worth  the 
name.  His  inertia  would  always  retard  human 
progress. 

It  has  been  suggested  that  a  system  of  com- 
pulsory insurance  would  and  ought  to  incur 
the  opposition  of  workmen.  To  some  extent 
this  was  the  attitude  of  German  workmen 
twenty-five  years  ago  towards  the  scheme  of 
Bismarck,  especially  of  those  who  were  under 
the  influence  of  the  extreme  socialists.  The 
most  plausible  ground  for  such  opposition  is 
that  it  would  tend  to  introduce  a  line  of  social 
demarcation.  But  this  position  will  not  bear 
scrutiny,  either  as  a  matter  of  sound  theory 
or  as  an  appeal  to  experience.  Lines  of  social 
demarcation  are  most  effectively  established 
by  conditions  of  industrial  inequality  between 
classes.  As  long  as  there  is  economic  depend- 
ence, there  must  be  a  lack  of  mutuality  in 
industrial  relations ;  there  will  be  a  tendency 
towards  arrogance  on  the  one  side  and  undue 
humility,  even  servility,  on  the  other.  What- 
ever ministers  to  equality  of  opportunity  tends 
to  efface  social  distinctions.  To  secure  the 
higher  independence  of  the  individual  through 
social  legislation  is  to  make  a  stride  towards 
genuine  democracy. 

The  lack  of  mutuality  is  a  productive  cause 


68  STATE   INSURANCE 

of  friction  between  classes.  As  might  have 
been  expected,  the  German  system  of  insur- 
ance has  contributed  to  a  better  feeling. 
*'Most  full  of  promise  for  the  future  of  the 
country  are  the  friendly  relations  between  the 
employing  and  the  employed  classes  which  has 
happily  been  brought  about  in  some  import- 
ant industries  by  the  compulsory  cooperation 
in  carrying  out  the  new  [insurance]  laws."  ^ 

The  workman,  as  well  as  the  state  to 
which  he  belongs,  is  deeply  interested  in  his 
own  eflSciency,  not  only  considered  in  the 
abstract  but  as  related  to  the  efficiency  of  com- 
peting nations.  If  a  system  of  universal  insur- 
ance by  creating  or  intensifying  solicitude  for 
the  life,  the  health,  and  the  physical  well- 
being  of  the  workman  thereby  increases  his 
industrial  efficiency,  it  is  a  personal  as  well  as  a 
social  economic  gain  and  gives  assurance  that 
he  is  not  to  be  at  a  disadvantage  in  an  indus- 
trial competition  which  is  world-wide.  "No 
one  can  doubt  that  the  general  well-being  of 
the  working  classes  in  Germany,  which  is 
strikingly  visible  to  the  eye  and  confirmed  by 
statistics  in  spite  of  many  unfavorable  cir- 
cumstances, is  in  a  large  measure  due  to  the 
insurance  system."  ^  "The  German  system 
is  having  a  profound  effect  on  the  whole  phys- 

*  W.  J.  Ashley,  Progress  of  the  German  Working  Classes,  p.  184, 

*  A,  Shadwell,  Industrial  Efficiency,  u,  147. 


STATE  INSURANCE  59 

ical  welfare  of  the  nation.  The  general  level 
of  vitality,  and  hence  the  working  capacity, 
is  being  distinctly  raised  as  a  result  of  it."  ^ 
The  author  first  cited  elsewhere  pronounces 
the  industrial  efficiency  in  Germany  as  dis- 
tinctly superior  to  that  in  either  of  its  great 
commercial  rivals.  Great  Britain  and  the 
United  States. 

Further  proof  of  the  beneficence  of  the  Ger- 
man workmen's  insurance  is  furnished  in  the 
fact  that  it  to-day  commands  the  almost  uni- 
versal acquiescence  of  workmen.  There  are 
criticisms,  but  they  look  for  amendment, 
enlargement,  and  improvement,  not  repeal.  It 
should  always  be  somewhat  conclusive  evid- 
ence of  the  soundness  of  a  proposition,  not 
that  it  retains  the  approval  of  its  friends,  but 
that  it  gradually  compels  the  assent  of  its 
opponents.  It  would  be  short-sighted  in  the 
extreme  for  workmen  to  oppose  a  plan  for 
the  general  insurance  of  wage-earners  against 
accidents,  sickness,  invalidity,  old  age,  and 
death,  —  a  plan  whose  virtue  has  been  demon- 
strated on  a  colossal  scale  for  a  period  of 
twenty  years ;  a  plan,  too,  which  must  infalli- 
bly reveal  defects  in  present  rates  of  wages  so 
far  as  they  have  overlooked  the  contingencies 
which  such  insurance  covers. 

'  F.  A.  Vanderlip,  in  North  American  Review,  clxxxi,  925. 


IV 

WORKMEN'S  INSURANCE   IN   GERMANY 

The  legislation  of  the  German  Empire  upon 
the  subject  of  compulsory  insurance  for  work- 
men was  a  series  of  events  of  profound  social 
significance.  Accustomed  as  we  are  to  note 
in  history  the  extremely  slow  progress  of  social 
reforms  in  legislative  enactment,  the  vary- 
ing insistence  of  public  demand,  the  painful 
evolution  of  law  through  experiment  and  fail- 
ure, we  must  deem  this  achievement  of  the 
German  people  as  without  parallel.  Within 
a  period  of  six  years  a  code,  revolutionary  in 
its  nature,  intimately  affecting  the  welfare 
of  the  laboring  people  of  the  nation,  was  per- 
fected in  its  general  plan,  minutely  elabor- 
ated in  its  details,  and  placed  upon  the  statute 
books,  apparently  as  a  permanent  institu- 
tion. 

To  this  swift  but  orderly  procedure  several 
causes  distinctly  contributed:  There  was  the 
hereditary  solicitude  of  the  royal  house  for 
the  working  classes,  dating  at  least  from  the 
declaration  of  Frederick  the  Great,  that  to 
hold  the  balance  between  classes  was  the 
supreme  duty  of  the  state;   there  was   the 


INSURANCE  IN   GERMANY  61 

teaching  of  Huss  and  of  Luther  as  to  the 
obliirations  of  the  Christian  state  towards  its 
members;  the  later  discussions  of  German 
philosophers  like  Fichte  and  Hegel ;  still  later 
the  more  definite  doctrines  and  demands  of 
the  socialists ;  there  had  been  for  centuries,  in 
some  parts  of  Germany,  an  experience  in  the 
matter  of  insurance  for  those  engaged  in  dan- 
gerous employments ;  *  there  had  been  for 
thirty  years  some  familiarity  with  the  idea  of 
state  compulsion ;  ^  there  was  especially  the 
imperious  will  and  the  sagacious  statesmanship 
of  Bismarck.  The  attempts  upon  the  life  of 
the  Emperor  and  the  aggressive  attitude  of  the 
radical  socialists  hastened  the  consummation. 
As  a  cure  for  what  seemed  to  Bismarck  a 
malignant  form  of  socialism,  he  prescribed 
inoculation. 

The  imperial  purpose  was  announced  in 
the  message  of  William  I  to  the  Reichstag  in 
November,  1881.  His  recommendations  were 
from  time  to  time  repeated  by  his  successors, 
Frederick  III  and  William  II,  The  plan  pro- 
claimed contemplated  three  branches  of  in- 
surance —  against  sickness,  against  accident, 
and  against  old  age  and  invalidity.  The  laws 
asked  for  were  to  aid  in  fulfilling  "the  highest 
obligations  of  every  community  based  on  the 

*  Ludwig  Lass,  Oerman  Workmen's  Insurance,  pt.  1,  p.  12. 
'  J.  G.  Brooks,  Compulsory  Insurance  in  Germany,  p.  34. 


62  STATE  INSURANCE 

moral  foundations  of  Christianity" ;  they  were 
to  be  "a  remedy  for  social  ills  ";  they  were 
**to  make  Germany  a  refuge  of  peace." 

The  bill  providing  for  insurance  against 
sickness,  submitted  in  1881,  became  a  law  in 
1883 ;  the  law  respecting  accidents  was  passed 
in  1884;  and  that  respecting  old  age  and  in- 
validity, in  1889.  These  laws  have  been  per- 
fected in  their  details  and  extended  in  their 
scope  by  subsequent  legislation,  but  the  whole 
scheme  has  developed  in  a  remarkably  sys- 
tematic and  consistent  manner.  Emphasis  has 
always  been  placed  upon  the  fact  that  the 
benefits  to  be  received  were  henceforth  to  be 
deemed  the  payment  of  a  legal  obligation  and 
not  a  public  charity.^ 

This  legislation  marks  an  era.  It  erects  a 
mile-post  from  which  a  certain  phase  of  so- 
cial progress  is  to  be  reckoned.  Legislation 
since  effected  and  to  be  effected  in  other  coun- 
tries must  in  some  degree  trace  its  origin  and 
inspiration  from  this  source.  Its  distinctive 
feature  may  be  regarded  as  a  recognition  of 
the  workman's  right  to  recompense  as  a  part 
of  the  obligation  which  is  due  him  from  society. 
It  has  been  said  of  the  attitude  of  the  German 
Government,  that  *'it  does  not  wish  to  be 
guided  merely  by  a  sense  of  pity  over  the  un- 
satisfactory position  of  wage-earners,  but  above 

»  Sec.  77,  Law  of  1881. 


INSURANCE  IN  GERMANY  C3 

all  by  a  sentiment  of  justice.  Its  aim  is  not 
only  to  improve  the  material  condition  of 
workmen,  but  also  to  lessen  and  equalize  as 
much  as  possible,  in  the  course  of  time,  the 
unhealthy  contrasts  between  employers  as  a 
class  and  the  working  population,  and  more 
still  it  wishes  to  revive  the  feeling  of  fellow- 
ship between  the  two  elements  of  production 

—  capital  and  labor."  * 

This  plan  of  insurance,  as  far  as  concerns 
its  compulsory  features,  includes  in  its  scope 
the  principal  wage- workers  of  the  Empire; 
provision  is  made  for  permitting  others,  not 
under  compulsion,  to  avail  themselves  of  its 
advantages  voluntarily.  A  few  statistics  in- 
dicate the  extent  of  its  operations.  Taking 
the  figures  of  1902,  which  answer  for  this  pur- 
pose, the  population  of  the  Empire,  in  round 
numbers,  was  58,000,000;  the  number  of 
wage-workers,  14,500,000;  the  number  in- 
sured under  sickness  insurance  was  10,320,- 
000;  under  accident  insurance,  19,083,000; 
under  invalidity  insurance,  13,381,000.  The 
number  insured  against  accidents  was  in- 
creased by  a  large  number  of  small  farmers 

—  not  included  under  the  term  wage-workers 

—  and  a  considerable  number  who  were  in- 
sured in  a  double  employment.  The  amount 
of  receipts  for  the  year  was  about  $130,000,- 

'  Ludwig  Lass,  German  Workmen's  Insurance,  pt.  1,  p.  12. 


64  STATE   INSURANCE 

000  for  the  three  branches;  the  expenditures 
were  about  $110,000,000,  and  the  accumu- 
lated funds  amounted  to  $330,000,000.'  These 
amounts  increase  somewhat  from  year  to 
year ;  for  example,  the  amounts  paid  out  for 
the  year  1904  were  about  $125,000,000.=^ 

It  is  proposed  to  give  here  only  a  very  brief 
sketch  of  the  scheme.  The  subject  was  very 
thoroughly  and  exhaustively  treated  in  the 
work  of  John  Graham  Brooks  on  "  Compulsory 
Insurance  in  Germany."^ 

Insurance  against  sickness  is  compulsory 
upon  workmen  and  employees  in  all  of  the 
main  employments,  which  are  designated  in 
some  detail  in  the  law,  such  as  manufacturing, 
mining,  railroad  work,  commercial  and  busi- 
ness pursuits  —  mainly  upon  those  receiving 
wages  or  salary  of  not  more  than  $476  per 
annum,  but  upon  certain  classes  of  workmen, 
regardless  of  amount  of  wages.  It  may  be 
extended  to  those  engaged  in  domestic  in- 
dustry, agriculture,  and  forestry. 

The  range  of  accident  insurance  is  similar 
and  it  is  subject  to  similar  extension,  but  it 

*  G.  Zacher,  Guide  to  Workmen's  Insurance,  German  Empire, 
Table  A.  Vide  Appendix  E. 

=>  C.  B.  Henderson,  in  Charities,  xix,  1191-1192. 

3  Fourth  Special  Report,  U.  S.  Com'r  of  Labor.  See,  also,  German 
Workmen's  Insurance,  in  five  parts.  Imperial  Insurance  OfBce, 
Berlin;  and  Rubinow,  in  Chautauqiian,  xli,  48  and  79,  giving  valu- 
able  diagrams  and  bibliographical  note;  W.  F.  Willoughby,  Work- 
men's Insurance,  pp.  29-87. 


INSURANCE  IN  GERMANY  65 

is  compulsory  on  those  receiving  wages  not 
exceeding  $714  per  annum. 

Old-age  and  invalidity  insurance  applies 
to  all  workmen  above  sixteen  years  of  age,  to 
apprentices  and  domestic  servants  without 
regard  to  the  amount  of  earnings,  and  to 
employees,  teachers,  etc.,  who  earn  less  than 
$476  a  year.  It  is  intended  to  reach  all  whose 
economic  condition  makes  such  insurance 
desirable.*  In  all  three  branches  of  insurance 
there  are  provisions  for  extension  and  modi- 
fication, —  in  some  cases  by  rules  of  the 
Federal  Council,  in  others  by  state  and  com- 
munal laws.  It  is  to  be  noted,  too,  that  the 
insurance  applies  without  regard  to  conditions 
of  health.  Reckoning  not  only  those  insured, 
but  their  families,  the  insurance  extends  to 
more  than  one  half  of  the  population  of  the 
Empire.  There  is  a  wholesome  provision  that 
the  insurance  shall  not  in  any  case  be  assigned, 
mortgaged,  or  attached  under  legal  process, 
nor  shall  the  benefits  be  waived  by  any  con- 
tract between  the  parties. 

A  distinctive  feature  of  the  accident  in- 
surance law  is  the  entire  abrogation  of  the 
defenses  of  common  employment  and  contrib- 
utory negligence.  Nothing  short  of  the  inten- 
tion, not  even  the  extreme  negligence  of  the 
person  injured,  can  defeat  his  claim,  and  the 

*  L.  Lass,  op.  cit.  pp.  17-18. 


66  STATE  INSURANCE 

intention  must  be  established  by  criminal  pro- 
ceedings/ This  may  be  deemed  the  first  de- 
claration by  legislative  enactment  of  the  prin- 
ciple of  Asquith's  apothegm,  **the  blood  of 
the  workman  is  a  part  of  the  cost  of  the  pro- 
duct." But  while  the  question  of  negligence 
is  practically  eliminated  as  far  as  the  work- 
man is  concerned,  the  employer  may  be  held 
liable  for  all  expenses  that  the  association 
(Berufsgenossenschaft)  may  incur  on  account 
of  any  accident  which  has  resulted  from  his 
intention  or  negligence,^  and  may  be  fined 
heavily  for  non-observance  of  the  regulations 
imposed  by  the  state  inspectors  or  the  trade 
associations  for  the  prevention  of  accidents.^ 
In  the  way  of  benefits  in  sickness  insurance 
the  insured  is  entitled  to  free  medical  treat- 
ment, medicines,  and  remedies,  or,  in  lieu 
thereof,  to  free  treatment  in  a  hospital ;  money, 
to  not  less  than  one  half  of  the  average  wages 
of  the  class  to  which  he  belongs,  to  maintain 
his  family  during  disability,  for  a  period  of 
twenty-six  weeks ;  the  same  for  six  weeks  for 
women  during  lying-in  periods;  in  case  of 
death,  burial  money  amounting  to  twenty 
times  a  day's  wages.  The  federal  law  fixes 
minimum  amounts  only  which  may  be,  and 

»  Sec.  95,  Law  of  1884,  and  sec.  8  of  Law  of  1887. 

'  Sec.  96,  Law  of  1884. 

'  K.  Hartmann,  German  Workmen's  Insurance,  pt.  3,  p.  8  . 


INSURANCE  IN  GERMANY  G7 

in  the  majority  of  cases  are,  increased  con- 
siderably by  the  associations  —  referred  to 
later  —  which  administer  funds  and  are  em- 
powered to  make  rules. 

Under  accident  insurance,  the  provisions  as 
to  medical  aid,  attendance,  medicines,  and 
hospital  treatment  are  similar  to  those  under 
sickness  insurance,  to  commence  at  the  begin- 
ning of  the  fourteenth  week  after  the  accident ; 
accident  benefit  up  to  two  thirds  of  the  average 
annual  earnings ;  and,  in  the  event  of  death, 
burial  money  as  in  sickness  insurance  and  an 
annuity  to  widow  and  children  up  to  sixty 
per  cent  of  earnings. 

The  benefits  under  invalidity  and  old-age 
insurance  are:  invalid  pensions  for  persons 
who  become  incapacitated  for  labor  after 
paying  premiums  for  tw  o  hundred  wrecks  and 
old-age  pensions  for  those  who  have  reached 
the  age  of  seventy  and  have  paid  premiums 
for  twelve  hundred  weeks.  Free  medical  or 
surgical  treatment  and  temporary  aid  to  de- 
pendents is  provided  to  prevent  invalidity. 
One  half  of  the  aggregate  premiums  paid  may 
be  refunded  in  the  case  of  a  woman  if  she 
marries,  in  case  of  death  before  the  pension 
becomes  due,  and  in  cases  falling  under  the 
accident  insurance  laws.  The  invalidity  pen- 
sion does  not  wait  for  total  incapacity,  but 
becomes  due  whenever  earning  capacity  is 


68  STATE  INSURANCE 

reduced  to  one  third  of  the  normal  capacity. 
Old-age  pensions  are  given  without  regard  to 
earning  capacity.  It  may  happen  under  the 
various  laws  that  one  is  entitled  at  once  to 
accident  and  invalidity  insurance,  or  invalid- 
ity and  old-age  insurance,  in  which  event  it  is 
his  privilege  to  select  the  most  advantageous. 
The  contributions  for  sickness  insurance 
are  made,  one  third  by  the  employers  and  two 
thirds  by  employees;  for  accident  insurance, 
entirely  by  employers;  and  for  old-age  and 
invalidity  insurance,  employers  and  employees 
contribute  equally,  the  state  adding  to  their 
joint  contribution,  for  each  annuity,  a  sub- 
sidy of  $11.90  per  annum.  While  in  accident 
insurance  the  employer  meets  the  entire 
charge,  he  is  largely  exempt  from  other  liabil- 
ity on  account  of  accidents.  The  charge 
varies  much  according  to  the  greater  or  less 
hazard  of  the  industry;  this  hazard  is  not 
averaged  between  the  various  industries,  but 
each  must  meet  its  own.  It  was  therefore 
provided*  that  establishments  should  be  classi- 
fied under  a  danger  tariff  which  must  have  the 
approval  of  the  Imperial  Insurance  Bureau 
and  must  be  revised  quinquennially.  This 
regulation  has  resulted  in  the  tabulation  of  all 
the  tariffs  of  the  Empire.' 

^  Sec.  28,  Law  of  1884. 

'  K.  Hartmann,  Tariff  of  Risks  of  the  Accident  Insurance  of  the 
German  Empire. 


INSURANCE  IN   GERMANY  69 

For  the  purposes  of  the  old-age  and  inval- 
idity insurance,  workmen  are  divided  into  five 
classes  according  to  earnings,  their  contrilju- 
tions  and  the  corresponding  benefits  being 
graduated  according  to  income,  although  a 
person  is  permitted  to  insure  in  a  class  higher 
than  that  to  which  he  belongs. 

The  key  to  the  method  of  managing  these 
various  insurance  funds  is  found  in  the  idea 
of  mutuality  and  self-administration.  In  the 
early  stages  of  legislation  the  Government  de- 
pended for  the  efficacy  of  its  appeal  upon  this 
feature.  It  sought  to  utilize  a  multitude  of 
existing  institutions.  In  the  matter  of  sick- 
ness insurance  —  which  was  first  undertaken 
—  the  compulsion  to  insure  was  somewhat 
mitigated  by  the  privilege  of  insuring  through 
certain  organizations,  the  insured  retaining 
in  their  own  hands  the  administration  of  af- 
fairs. There  were  five  or  six  classes  of  asso- 
ciations all  over  the  Empire,  many  of  them  of 
long  standing,  some  even  very  ancient,  to 
whom  their  members  had  been  accustomed 
to  look  for  aid  in  sickness.  These  were 
made  the  administrative  agency  for  sickness 
insurance. 

The  administration  of  accident  insurance 
was  confided  to  associations  of  employers. 
To  them  was  intrusted  the  accumulation  of 
funds  under  the  law,  and  the  control  and  regu- 


70  STATE  INSURANCE 

lation  of  such  funds  under  statutes  of  their  own 
enactment,  subject  to  the  supervision  of  the 
Imperial  Bureau.  The  workmen  are  entitled, 
however,  to  an  honorary  cooperation  with 
employers  in  investigating  accidents  and  to 
take  part  in  proceedings  before  arbitration 
courts  and  the  Imperial  Insurance  Office. 

The  old-age  and  invalidity  insurance  is 
administered  through  insurance  institutions 
which  are  defined  geographically,  the  districts, 
thirty-one  in  number,  each  having  its  own  in- 
surance office.  Each  institution  has  a  com- 
mittee composed  of  equal  numbers  of  employ- 
ers and  insured  and  manages  its  own  affairs 
independently. 

The  determination  of  questions  arising 
under  these  various  laws  rests,  in  the  first 
instance,  with  the  local  institution,  but  an 
appeal  may  be  taken  from  its  decision,  either 
by  the  insured  or  the  local  official,  to  a  court 
of  arbitration  and  thence  to  the  Imperial  In- 
surance Office.  Through  all  proceedings  the 
mere  forms  of  law  and  procedure  are  deemed 
of  less  importance  than  consideration  of  the 
social  and  ethical  questions  involved.  Rigid 
rules  of  evidence  are  not  adhered  to,  probabil- 
ities are  weighed  judicially,  solicitors  are  not 
required,  —  the  party  having  the  right  to  ap- 
pear personally  in  the  highest  courts,  —  and 
every  effort  is  made  to  avoid  legal  disparity 


INSURANCE  IN   GERAL\NY  71 

between  parties  who  are  economically  unequal. 
Tribunals  seek  to  render  material  justice  and 
to  ascertain  the  intention  of  the  legislator  from 
the  social  point  of  view/ 

It  should  be  added  that,  in  addition  to  the 
obligatory  insurance  provided  for,  there  may 
be  insurance  through  other  institutions  if  they 
make  equally  efficacious  provision  for  the 
insured.  The  relief  department  at  Krupp's, 
at  Essen,  may  be  taken  as  an  example,  but  in 
that  department,  established  in  1853,  the  com- 
pulsion is  exercised  by  the  employer. 

The  development  of  this  scheme  of  insur- 
ance has  displayed  the  care,  the  patience,  the 
persistence  of  the  German  people  in  matters 
of  administrative  detail.  It  has  also  shown  to 
them  and  to  the  world  at  large  how  essentially 
the  questions  involved  affect  society.  When 
attention  was  directed  to  sickness  in  all  of  its 
features  and  to  accidents  in  their  various 
forms,  it  came  to  be  realized  that  a  state  could 
not  wisely  be  indifferent  to  anything  which 
materially  affects  the  working  capacity  of  the 
man  who  toils.  More  than  ever  before  it 
became  the  practical  problem  to  prevent 
rather  than  to  cure,  to  avoid  accidents  rather 
than  to  care  for  the  victim,  merely  as  a  matter 
of  social  economy.  The  workingman  as  a 
part  of  the  industrial  machinery  of  the  nation 

'  L.  Lnss,  Of.  cit.  p.  29. 


72  STATE  INSURANCE 

was  not  to  be  left  to  his  own  narrow  and  un- 
trained prudence,  but  the  state,  through  this 
legislation,  was  to  endeavor  to  minimize  sick- 
ness and  accidents  as  well  as  to  make  provi- 
sion for  them  when  they  should  occur.  The 
distinct  social  and  economical  value  of  health, 
of  unimpaired  strength,  of  freedom  from  ac- 
cidents, was  to  receive  fuller  recognition.  If 
accidents  and  sickness  were  unprofitable  for 
the  state,  they  must  be  avoided,  not  merely 
out  of  a  sentimental  regard  for  the  individual ; 
if  machinery  was  dangerous,  there  must  be 
proper  safeguards;  if  the  ordinary  risks  of 
an  industry  were  extraordinarily  great,  there 
must  be  extraordinary  precautions;  if  the 
excessive  use  of  intoxicating  liquor  tended 
to  increase  the  number  of  accidents  or  other- 
wise to  diminish  the  workman's  efficiency, 
then  temperance  must  be  urged  and  insisted 
upon. 

The  care  of  the  sick  and  injured  might  have 
been  of  the  most  perfunctory  sort ;  there  might 
have  been  a  mere  literal  compliance  with  the 
terms  of  the  contract  of  insurance  and  with 
the  law ;  but  —  perhaps  as  the  most  natural 
and  almost  inevitable  result  —  there  has  been 
a  positive  and  growing  tendency  to  go  far 
beyond  the  strict  legal  obligation  and  to  take 
the  broadest  and  most  humane  view.  A  brief 
rehearsal  of  some  of  the  measures  adopted, 


INSURANCE  IN  GERMANY  73 

although  fragmentary,  is  highly  suggestive. 
There  has  been  a  strong  tendency  to  extend 
the  help  which  is  effective  and  lasting.  In  the 
interests  of  the  sick  and  injured  there  have 
been  called  into  requisition  the  most  highly 
trained  physicians  and  surgeons,  specialists 
for  every  form  of  disease  or  injury,  utilizing 
the  most  recent  discoveries  in  medical  and 
surgical  science;  apparatus  and  appliances, 
often  expensive,  are  furnished,  such  as 
crutches,  supports,  trusses,  artificial  limbs, 
false  teeth;  there  are  hospitals,  clinics,  sana- 
tories,  convalescent  homes  and  recreation 
grounds  in  the  country  and  at  the  seaside,  with 
the  attendance  of  well-trained  physicians,  sur- 
geons, and  nurses.  There  is,  too,  an  aggress- 
ive promulgation  of  knowledge  in  regard  to 
all  these  details ;  instruction  is  given  to  mem- 
bers of  sick-clubs  as  to  important  principles  of 
hygiene ;  courses  of  lectures  are  given ;  popu- 
lar works  are  distributed  for  the  purpose  of 
disseminating  information. 

The  prevention  of  accidents  to  workmen 
has  been  deemed  worthy  of  the  very  careful 
and  serious  study  of  German  statesmen  and 
students  of  social  science.  Elaborate  collec- 
tions of  statistics  have  been  prepared  to  show 
the  percentage  of  preventable  accidents.*  The 

*  G.  A.  Klem,  Guide  to  Workmen's  Insurance  of  the  German 
Empire. 


74  STATE   INSURANCE 

science  of  the  prevention  of  accidents  is  stud- 
ied in  all  its  bearings.  Research  and  invention 
are  stimulated  in  the  direction  of  safety  appli- 
ances by  prizes.  Bulletins  and  articles  in 
periodical  reviews  are  published;  exhibitions 
are  held;  museums  and  agricultural  societies 
display  special  collections  of  devices.  There 
are  imperial  laws  and  trade  regulations  making 
it  obligatory  upon  employers  to  minimize 
dangers;  there  are  state  and  technical  in- 
spectors and  trade  officials  whose  duty  it  is 
to  see  that  wholesome  regulations  are  faith- 
fully observed ;  and  there  are  heavy  penalties 
for  delinquents. 

The  supervision  and  inspection  concerns 
itself  with  machinery,  its  dangers,  and  proper 
safety  devices ;  with  precautions  against  vari- 
ous kinds  of  dust,  gases,  vapors,  and  poison- 
ous substances;  with  the  supply  of  respirat- 
ors and  eye-protectors;  with  the  matter  of 
cleanliness,  changing  of  clothes,  facilities  for 
washing  and  bathing ;  with  the  location,  con- 
struction, lighting,  heating,  ventilation,  and 
general  hygienic  condition  of  buildings;  and 
with  the  matter  of  intemperance,  long  work- 
ing hours,  excessive  exertions,  protracted 
work  in  certain  attitudes  as  bearing  upon  the 
fitness  of  men  to  work  in  a  given  industry. 

It  may  be  claimed  fairly  for  this  great 
scheme  of  insurance  that  it  has  passed  beyond 


INSURANCE  IN   GERMANY  75 

the  phase  of  experiment.  It  encountered  in 
the  outset,  especially  before  the  attitude  of 
Emperor  William  I  had  been  indicated,  bitter 
criticism  and  opposition.  A  writer  in  a  Ger- 
man insurance  journal  in  1876,  five  years 
before  the  message  of  the  Emperor  to  the 
Reichstag,  declared  that  the  scheme  was 
Utopian  and  was  popular  only  with  ignora- 
muses and  pot-house  politicians.*  The  change 
in  public  sentiment  may  be  illustrated  by  the 
fact  that  in  1889  the  old-age  and  invalidity  law 
passed  the  Reichstag  by  a  small  majority,  the 
revision  of  the  law  in  1899  was  carried  almost 
unanimously.  While  the  public  mind  is  alert 
to  suggest  improvements,  there  is  no  consider- 
able body  of  men  who  would  advocate  a  repeal. 
The  plan  has  commended  itself  not  only  to  the 
German  people,  but  to  increasing  numbers 
among  all  the  nations  of  Europe.  While  this 
result  may  be  attributed  in  some  measure  to 
the  ferment  which  has  been  working  in  the 
minds  of  men  for  a  generation,  it  must  be 
credited  largely  to  the  bold  initiative  of  Ger- 
many. This  took  the  subject  out  of  the  cate- 
gory of  academic  discussion  and  successfully 
demonstrated  on  a  colossal  scale  and  in  a  dra- 
matic fashion  what  might  be  accomplished  by 
a  resolute  will,  an  honest  and  philanthropic 
purpose,  and  tireless  patience  in  elaboration. 

*  Quoted  by  Walford,  Insurance  Cychpccdia,  v,  91. 


76  STATE  INSURANCE 

It  furnished  a  revelation  as  to  the  possibilities 
of  sane,  beneficent,  social  legislation.  It  has 
endured  the  keen  scrutiny  and  criticism,  not 
always  friendly,  of  observers  at  home  and 
abroad,  and  after  a  trial  of  twenty-five  years 
has  won  their  approval.  They  concur  with 
great  unanimity  in  the  judgment  that  it  has 
produced  a  deep  and  lasting  effect  upon  the 
moral  and  material  welfare  of  the  working 
classes  of  the  Empire.^ 

Never  before,  perhaps,  on  any  arena  has 
there  been,  in  any  brief  time,  through  legisla- 
tion, a  social  awakening  so  significant  and  so 
profound.  During  the  same  period  there  has 
been  a  degree  of  commercial  industrial  pro- 
gress almost  without  parallel.  We  may  not 
insist  that  these  two  facts  are  related  as  cause 
and  effect,  although  that  is  the  confident 
claim  of  competent  observers ;  but  there  would 
seem  to  be  a  refutation  of  the  prediction  that 
such  legislation  would  prove  highly  disastrous 
to  the  Empire  in  its  competitive  struggle  with 
its  commercial  rivals. 

But  there  have  been  moral  results  which  far 
transcend  in  importance  any  considerations  of 
material  progress  or  commercial  supremacy. 
The  German  people  have  found  a  solution  of 

*  L.  Lass,  op.  cU.  p.  30 ;  A.  Shadwell,  Industrial  Efficiency,  ii,  147, 
161 ;  J.  G.  Brooks,  Social  Unrest,  p.  249;  I.  M.  Rubinow,  in  Chaidau- 
quan,  xli,  59;  F.  Kestner,  in  North  American  Review,  clxxix,  445; 
F.  A.  Vanderlip,  in  North  American  Review,  clxxsi,  922. 


INSURANCE  IN   GERMANY  77 

a  problem  of  the  greatest  possible  conse- 
quence to  the  laboring  classes ;  they  have  as- 
certained and  proclaimed  to  the  world  that 
there  was  an  obligation  to  these  classes  which 
must  be  paid  as  a  matter  of  right  rather  than 
of  charity;  that  before  showing  mercy  it  was 
necessary  to  do  justice. 


ACCIDENT   INSURANCE   AND   WORKMEN'S 
COMPENSATION 

YT  ORKMEN  Suffer  no  class  of  misfortunes 
which  appeal  more  strongly  to  sympathy  than 
accidents.  Old  age,  the  gradual  impairment 
of  bodily  strength,  even  death  after  wasting 
sickness,  do  not  come  with  the  same  tragic 
effect  as  the  accident  which  falls  like  a  thun- 
derbolt out  of  a  clear  sky.  It  may  have  the 
most  disastrous  consequences;  it  may  befall 
the  young  man  in  the  full  use  of  his  physical 
powers ;  it  may  maim ;  it  may  incapacitate  for 
labor  either  temporarily  or  permanently;  it 
may  reduce  a  family  to  poverty  and  helpless- 
ness in  an  instant.  These  appalling  features  of 
accidents  have  disposed  workmen,  especially 
in  dangerous  employments,  to  the  plan  of 
mutual  protection.  For  example,  some  form 
of  accident  insurance  has  been  in  existence  in 
certain  mining  regions  for  centuries. 

But  however  keenly  those  engaged  in  dan- 
gerous industries  have  appreciated  the  perils 
which  constantly  menace  them,  the  outside 
world  has  often  looked  on  with  too  much  in- 
difference. We  are  far  more  impressed  by  the 
loss  of  22,000  men  in  the  two  years  of  the  Boer 


INSURANCE  AND  COMPENSATION      79 

War  than  by  the  fact  that  almost  the  same 
number  were  killed  in  railroad  accidents  in 
the  United  States  during  the  three  years  end- 
ing June  30,  1900 ;  ^  and  the  statement,  often 
repeated,  that  the  enormous  disparity  between 
this  country  and  England  and  other  countries 
in  the  matter  of  railroad  accidents  is  con- 
stantly growingj^does  not  arouse  us  to  definite 
action. 

We  justify  our  passive  acquiescence  in  the 
existing  conditions  on  the  theory  that  they  are 
inevitable,  or  that  the  workman  knows  and 
assumes  all  risks,  and,  if  he  meets  with  mis- 
fortune, has  simply  been  a  loser  in  the  great 
game  of  life  which  we  are  all  playing,  or  we 
take  refuge  in  the  exploded  doctrine  that,  in 
trades  that  are  dangerous,  the  workman  has 
compensation  for  the  danger  in  higher  wages. 

Even  if  accidents  in  this  country  are  not 
excessive;  if  the  loss  in  industrial  efficiency 
from  that  cause  is  unavoidable;  if  the  work- 
man appreciates  the  risk  of  his  work  and  is 
discriminately  compensated,  nothing  except 
some  form  of  insurance  or  mutual  effort  could 
make  suitable  provision  for  the  uncertainties 
of  the  future. 

But  as  a  matter  of  fact,  a  comparison  of  this 
with  other  civilized  countries  leads  us  to  be- 

*  A.  Shadwoll,  Industrial  Efficiency,  i,  25. 
'  Atlantic  Monthly,  cii.  109. 


80  STATE  INSURANCE 

lieve  that  accidents  here  are  far  more  numer- 
ous than  they  should  be/  We  know  too  that 
the  workman  has  no  adequate  data  for  his  in- 
struction as  to  the  risks  of  any  given  employ- 
ment compared  with  other  employments.  He 
may  learn  in  a  disconnected  fashion  that  in 
the  mines  of  England  and  Wales,  of  527,000 
employees  101,000  are  injured  each  year  and 
1000  are  killed;^  that  the  percentage  is 
nearly  three  times  as  great  in  the  United 
States;^  that  there  were  nearly  1000  killed 
in  the  mines  of  the  United  States  during  the 
month  of  December,  1907;  that  for  the  year 
ending  June  30,  1906,  of  about  1,500,000 
employed  on  the  railroads  of  the  United  States 
about  4000  were  killed,  being  one  of  every 
387,  and  over  76,000  were  injured,  or  one  in 
20;^  that  of  56,000  employed  on  the  steam 
railroads  of  Massachusetts,  for  an  average  of 
ten  years,  70  were  killed  each  year  and  464 
injured,  and  on  electric  railroads  a  little 
larger  ratio.'  But  from  such  figures  he  does  not 
deduce  any  law  of  risks  or  make  any  estimate 
of  the  cost  of  assuming  them.  Still  less  does  he 
adequately  weigh  the  comparative  risk  of  dif- 
ferent employments ;  he  does  not  fully  realize 

'  A.  F.  Weber,  in  Political  Science  Quarterly,  xvii,  257. 

*  Westminster  Review,  cxxxi,  500. 

'  Springfield  Republican,  February  3,  1908. 

*  Nineteenth  Rep.  Interstate  Commerce  Commission,  pp.  109, 129. 
'  Thirty-eighth  Rep.  Mass.  R.  R.  Commission,  pp.  47,  48. 


INSURANCE  AND  COMPENSATION      81 

that  one  employment  may  be  five,  ten,  twenty, 
one  hundred  times  as  dangerous  as  another; 
that  those  engaged  in  destroying  buildings 
incur  risks  even  three  hundred  and  fifty  times 
as  great  as  those  engaged  in  manufacturing 
cravats  by  hand ! '  To  gather,  tabulate,  and 
apply  the  data  bearing  upon  the  risks  of  a 
given  employment  is  a  task  of  vast  detail  and 
requiring  high  actuarial  skill.  If  the  individual 
workman  estimates  that,  for  a  given  year,  in 
the  work  of  mining  he  has  one  chance  in  four 
of  being  injured,  he  may  not  realize  how  much 
that  means  for  a  lifetime  of  service,  or  the 
more  important  fact,  viewed  from  the  stand- 
point of  insurance,  that  the  accident  which  is 
his  due  according  to  the  laws  of  chance  may 
befall  him  in  youth  as  well  as  in  later  life,  at 
the  beginning  of  his  employment  as  well  as 
at  the  end,  during  the  first  year  or  the  first 
day  as  well  as  the  last. 

We  must  dismiss  the  idea  that  the  workman, 
in  his  contract  of  employment,  intelligently 
weighs  the  risk;  and  we  must  conclude,  upon 
a  very  brief  inspection,  that  dangerous  trades 
really  pay  lower  rather  than  higher  wages,  or, 
stated  in  another  form,  such  industries  com- 
mand the  services  of  only  the  poorly  paid 
laborers.     "To    the    intelligent    trade-union 

^  K.  Hartmann,  Das  Gefahrentarifuwsen  der  Unfallversicherung 
dea  DeiUschen  Reichs,  pp.  72,  75. 


82  STATE  INSURANCE 

oflBcial  it  became  increasingly  evident  that  the 
compensatory  effect  of  bad  conditions  took 
the  form,  not  of  higher  rates  paid  by  the  em- 
ployer, but  of  a  lower  grade  of  character 
among  the  work-people.  When  the  conditions 
of  safety,  health,  and  comfort  in  the  trade  fell 
below  the  standard  of  other  occupations,  the 
trade-union  official  did  not  find  that  the  mem- 
bers got  higher  wages."  *  This  is  necessarily 
the  result,  and  especially  wherever  there  is 
a  surplus  of  labor,  where  the  supply  is  arti- 
ficially stimulated,  or  where,  as  in  the  mining 
and  coal  regions,  there  is  the  "relentless  use 
of  every  known  agency  to  keep  wages  (and 
therefore  the  standard  of  life)  as  low  as  pos- 
sible." ^  It  is  fatuous  to  assume  that  the  inde- 
pendence of  the  individual  controls  the  rate  of 
wages ;  for  large  classes  of  workmen  there  is  no 
such  thing  as  industrial  freedom. 

But  if  the  workman  could  contract  upon  the 
basis  of  absolute  equality  and  could  correctly 
estimate  the  margin  of  risks  and  losses,  of 
waste  in  his  industrial  life  of  every  nature,  he 
could  not  sanely  gamble  upon  his  possible 
immunity;  nor  could  the  state  permit  him  to 
use  improvidently  each  day's  earnings,  reck- 
less of  the  contingencies  of  the  future.  If  the 
day's  wage  virtually  includes  an  amount  suf- 

*  S.  &  B.  Webb,  Industrial  Democracy,  ii,  357. 
'  J.  G.  Brooks,  The  Social  Unrest,  p.  28. 


INSURANCE  AND   COMPENSATION      83 

ficient  to  anticipate  accidents  that  may  befall 
him,  that  amount,  by  some  method,  voluntary 
or  obligatory,  should  constitute  a  reserve;  this 
is  demanded  by  the  interests  of  the  individual 
and  the  interests  of  society. 

The  subject  of  accident  insurance  seems  to 
call  for  a  full  consideration  of  the  question  of 
employer's  liability. 

About  seventy  years  ago,  within  a  period  of 
five  or  six  years  there  were  three  events  in  the 
domain  of  jurisprudence  of  signal  importance 
to  the  industrial  world.  Viewed  retrospect- 
ively with  reference  to  their  bearing  upon  the 
welfare  of  men,  they  have  a  distinct  dramatic 
interest. 

In  the  year  1837  the  decision  was  rendered 
in  the  celebrated  Priestly  case;  '  in  1838 
Prussia  enacted  a  memorable  law  relating  to 
the  responsibility  for  accidents  on  railroads; 
and  in  1842  the  Farwell  case  ^  was  decided  in 
Massachusetts. 

The  Prussian  law,  afterwards  incorporated 
in  the  Imperial  Code  of  1871,  apprehend- 
ing with  rare  prescience  something  of  the 
new  questions  which  were  to  arise  in  the  in- 
dustrial world,  may  be  deemed  to  have  pre- 
figured the  present  insurance  code  of  Ger- 
many, the  most  striking  social  legislation  of 

>  Priestly  V.  Fowler.  3  Mees.  &  W.  1. 
»  Farwell  v.  B.  &  W.  U.  R.  4  Met.  49. 


84  STATE  INSURANCE 

the  century ;  the  two  legal  decisions  opened  a 
Pandora's  box  of  woes  of  appalling  magni- 
tude. There  were  thus  marked  out  two  dis- 
tinctly divergent  conceptions  of  the  obligations 
of  the  state  towards  workmen. 

If  a  general  on  the  battlefield  commits  a  great 
strategical  blunder  which  costs  thousands  of 
lives,  we  are  thrilled  with  horror,  but  a  judge 
may  so  misapprehend  a  critical  situation  as 
to  desolate  innumerable  homes  for  generations 
and  we  dumbly  acquiesce  as  if  viewing  a  visit- 
ation from  heaven.  That  such  a  result  was 
produced  by  these  decisions  will  be  the  en- 
lightened judgment  of  mankind.  They  have 
inflicted  unjust  and  grievous  burdens  upon 
two  generations  of  English-speaking  work- 
men; they  have  devastated  the  homes  of 
thousands;  they  have  aggravated  beyond  es- 
timate the  friction  between  employer  and 
employed. 

That  the  decision  in  each  case  constituted 
judge-made  law  is  strikingly  manifest  from  the 
language  of  Lord  Abinger  and  Chief  Justice 
Shaw.  They  deemed  the  cases  of  novel  im- 
pression, to  be  decided  with  a  view  to  the 
consequences  of  the  decision,  general  con- 
venience, and  considerations  of  policy.  The 
enlightened  legislator  considers  the  ethical 
as  well  as  the  economic  and  purely  legal  as- 
pects of  proposed  legislation;  the  judge  who 


INSURANCE  AND  COMPENSATION      85 

makes  law  should  take  the  same  attitude,  but 
weighed  by  the  standards  of  to-day  these 
judges  would  seem  to  have  had  more  regard 
for  mere  legal  formalism  than  for  ethics. 

Thus  was  firmly  established  the  common- 
employment  or  fellow-servant  doctrine,  —  the 
principle  that  the  workman,  by  his  contract 
of  service,  assumes  all  risks  of  the  employ- 
ment, including  the  risks  that  may  come 
through  the  act  or  neglect  of  his  fellow  serv- 
ant. The  doctrine  has  had  a  phenomenal 
development,*  and  usually  in  the  direction  of 
giving  larger  immunity  to  employers.^  The 
dicta  in  the  Priestly  case  did  not  justify  the 
judgment  in  the  Farwell  case,  nor  did  that, 
in  view  of  the  expressed  caution  against 
"  any  hasty  conclusion  as  to  the  application 
of  the  rule,"  lay  a  sufficient  foundation  for 
the  vast  brood  of  cases  which  trace  their 
parentage  to  it. 

It  has  been  said  of  the  principle  established 
that  no  such  doctrine  appears  to  exist  in  any 
country  of  Europe  except  England;^  that  it 
was  bad  law  and  bad  policy.* 

These  cases  were  of  such  transcendent  im- 
port; they  so  powerfully  affected  industrial 

*  Pollock  on  Torts,  7th  ed.  p.  96. 

*  Hanxird  Txiw  Review,  ii,  213. 
'  Pollock,  op.  cit.  p.  97. 

*  Sir  F.  Pollock,  before  Royal  Commission,  Pari.  Rep.  1893,  voL 
xxxix,  pt.  1. 


86  STATE  INSURANCE 

relations  and  conditions ;  and  they  have  reared 
so  formidable  an  obstacle  for  rational  reform 
in  the  direction  of  justice  to  workmen  that 
any  consideration  of  accident  insurance  com- 
pels a  somewhat  full  examination,  even  at  the 
risk  of  the  charge  of  traveling  again  a  much- 
trodden  path. 

Undoubtedly  it  was  the  opinion  of  Chief 
Justice  Shaw  rather  than  that  of  Lord  Abin- 
ger  that  tended  to  establish  the  law  in  Eng- 
land as  well  as  in  America.*  *'The  most  com- 
plete exposition  of  what  constitutes  common 
employment  is  to  be  found  in  the  great  judg- 
ment of  Shaw,  C.  J.  .  .  .  which  no  doubt  in- 
fluenced the  House  of  Lords  in  Bartonshill 
Coal  Co.  V.  Reid."^  This  was  the  case  in 
which  the  doctrine  was  forced  upon  the  re- 
luctant courts  of  Scotland.' 

The  facts  in  the  Farwell  case,  as  agreed 
upon,  were  very  simple.  The  plaintiff,  an 
engineer  in  the  employment  of  the  defendant, 
in  the  course  of  his  employment  is  injured  — 
loses  his  right  hand  —  through  the  negligent 
act  of  a  switchman,  a  fellow  employee.  Is 
the  railroad  company  liable.^  The  opinion, 
as  befitted  the  importance  of  the  principle 
involved,  is  an  elaborate  one;  it  has  been 

'  J.  F.  Dillon,  in  American  Law  Review,  xxiv,  180,  181. 

'  McQueen,  266 ;  Sir  Francis  H.  Jeune  in  The  Petrel,  1893,  p.  33. 

'  Pollock,  Of.  cit.  p.  97. 


INSURANCE  AND  COMPENSATION      87 

greatly  admired  and  has  been  pronounced  a 
classic.  According  to  the  better  opinion  of  the 
present  day,  except  for  an  unfortunate  waiver 
by  plaintiff's  counsel,  the  judgment  could 
have  been  very  brief:  Respondeat  superior. 
The  principle  of  that  maxim  should  have 
been  deemed  of  universal  application.^ 

The  decision  seems  to  rest  largely  upon 
three  supposed  facts  :  — 

That  hazardous  employments  command 
higher  wages,  and  the  acceptance  of  higher 
wages  indicates  an  assumption  of  the  risk; 

That  each  servant  is  an  observer  of  the  other 
and  therefore  knows  the  risk  he  assumes ;  and 

That  the  servant  may  leave  the  service. 

These  questions  of  fact  were  not  ascertained 
by  a  jury ;  the  court  did  not  seek  for  any  ex- 
pert information;  but  they  seemed  so  mani- 
fest that  judicial  cognizance  might  be  taken 
of  them. 

The  first  question  was  one  for  the  socio- 
logist or  the  political  economist  and  not  for 
the  jurist.^  Generally  hazardous  employments 
do  not  command  higher  wages.  The  risk  has 
very  little  effect  upon  wages. ^  Besides,  viewed 
broadly  and  from  a  social  standpoint,  it  would 

»  Pollock,  mp.  cit.  Pari.  Rep.  1893. 

'  Taylor,  Employers'  Liability,  p.  13. 

'  Mass.  Bureau  of  Stati.itic.i  of  Labor,  1883  (Wright),  pp.  60.  85; 
Taylor,  op.  cit.  p.  14;  N.  Y.  Bureau  of  Statistics  of  Ixibor,  1899  (We- 
ber), p.  647;  S.  &  B.  Webb,  Industrial  Democracy,  vol.  i,  p.  557. 


88  STATE  INSURANCE 

be  unwise  in  the  extreme  for  the  state  to  per- 
mit the  workman  to  gamble  upon  his  chance  of 
escape  from  accident.  He  is  virtually  in  the 
position  of  one  who  bets  without  the  means  of 
paying  in  case  he  loses;  and  he  has  not  the 
data  or  capacity  for  making  an  intelligent  esti- 
mate of  the  amount  or  value  of  the  risk.  It 
would  be  against  public  policy  —  upon  which 
the  decision  is  partially  based  —  to  permit 
him  to  play  a  game  in  which  the  state  is  to  be 
the  real  loser  if  he  loses. 

Nor  is  it  true,  under  modern  conditions  to 
which  this  judgment  with  greatly  added  rigors 
has  been  extended,  that  such  fellow  servants 
have  any  adequate  means  of  observing  their 
fellow  workmen  engaged  in  an  entirely  dis- 
tinct branch  of  service.  How  much  this  en- 
gineer, running  a  passenger  train  from  Boston 
to  Worcester,  passing  this  switchman  two  to 
four  times  a  day  in  Newton,  knew  of  his 
fitness,  habits,  or  reliability,  we  are  left  to 
conjecture;  he  had  nothing  to  do  with  his 
selection,  training,  or  retention  in  service.  But 
it  would  be  infinitely  absurd  to  claim  that,  in 
the  complicated  relations  of  to-day,  there  is 
any  such  knowledge. 

Nor  is  it  true  in  the  broadest  sense  that 
the  workman  may  leave  the  service.  It  might 
be  true  from  the  standpoint  of  one  writing 
a  treatise  on  free  will ;  but  Hamilton  has  told 


INSURANCE  AND  COMPENSATION      89 

us  that  **  power  over  a  man's  subsistence 
amounts  to  a  power  over  his  will."  *  This  was 
said  of  judges,  but  a  fortiori  it  is  true  of  the 
workman.  It  is  well  understood  in  the  indus- 
trial world  that  there  is  no  place  for  a  work- 
man who  is,  from  the  employer's  standpoint, 
captious  or  hypercritical,  or  for  one  who 
should  assume  to  advise  as  to  the  competency 
of  a  fellow  servant,  even  in  matters  especially 
concerning  his  own  safety.  To  leave  one's 
employment  as  a  protest  would  carry  with  it  a 
stigma;  it  is  one  of  the  heinous  offenses.  Be- 
sides, it  means  usually  a  period  of  idleness  for 
which  no  provision  has  been  made,  with  con- 
sequent privation  and  suffering  for  a  family. 

But  out  of  such  supposed  facts  was  evolved 
the  fiction  of  an  implied  contract  on  the  part 
of  the  plaintiff  under  which  he  assumed, 
among  other  risks,  the  risk  that  a  fellow  serv- 
ant might  be  incompetent  or  grossly  neg- 
ligent, an  implied  contract,  too,  upon  a  point 
which  was  not  contemplated  by  either  party ! 

Upon  this  very  frail  and  insecure  founda- 
tion was  based  a  decision  fraught  with  mo- 
mentous consequences.  For  many  decades 
thousands  of  workmen,  maimed  and  incapac- 
itated, suffering,  without  any  color  of  justice, 
from  accidents  on  railroads  and  in  factories, 
as  well  as  the  surviving  widows  and  orphans 

•  Federalist,  no.  79, 


90  STATE  INSURANCE 

of  the  slain,  were  to  hear  the  refrain  of  this 
doom  which  sentenced  them  often  to  lives  of 
poverty  or  dependence.  During  all  this  period 
legislatures,  royal  commissions,  and  parlia- 
ments were  to  seek  in  vain  to  overcome  the 
baleful  effects  of  this  decision. 

It  is  much  to  be  lamented  that  "considera- 
tions of  public  policy  and  general  convenience  '* 
were  not  more  broadly  considered.  To  the 
great  chief  justice  it  seemed  inconvenient  that 
this  corporation  should  suffer  on  account  of 
the  neglect  of  one  of  its  servants  whom  it  had 
selected  perhaps  with  care;  but,  on  the  other 
hand,  it  was  certainly  inconvenient  that  this 
engineer  should  be  incapacitated  for  life 
through  the  fault  of  an  agent  over  whose 
selection  or  retention  he  had  no  control  and 
for  whose  negligence  he  was  not  remotely 
responsible. 

According  to  modern  conceptions  the  solu- 
tion of  the  problem  presented  would  not  have 
been  diflficult.  Here  was  an  industry  compara- 
tively new,  with  its  own  hazards.  The  corpor- 
ation must  replace  its  engine,  wrecked  in  the 
same  accident,  negligence  or  no  negligence; 
that  was  one  of  the  risks  of  the  business.  Why 
should  it  not,  for  the  same  reason  and  out  of 
the  same  resources,  pay  for  its  wrecked  engin- 
eer ?  Why  should  not  both  losses  have  been 
deemed  a  part  of  the  cost  to  the  public?    If 


INSURANCE  AND   COMPENSATION      91 

the  traffic  involved  such  losses,  why  should  not 
the  public  pay  for  them  directly  ?  How  else, 
with  any  regard  to  the  rudimentary  principles 
of  justice,  could  the  loss  be  met  ? 

At  the  time  of  this  decision  the  world  was 
slowly  awakening  to  the  fact  of  great  indus- 
trial changes.  The  Factory  Age  had  come; 
great  inventions  and  the  application  of  steam 
to  machinery  were  transforming  the  indus- 
trial world.  It  was  gradually  dawning  upon 
the  minds  of  thoughtful  men  that  these  great 
changes  had  made  imperative  new  standards 
of  law  as  related  to  industry.  The  problem 
was  dimly  apprehended,  as  indicated  by  the 
Prussian  law  referred  to  as  well  as  by  the  fac- 
tory legislation  which  had  engaged  the  atten- 
tion of  England  since  the  beginning  of  the 
century. 

Possibly  the  chief  justice  was  one  of  those 
who  were  then  patronizingly  characterizing 
the  law  of  Prussia  as  the  benign  paternalism 
of  a  despotic  power.  But  if  Prussia  reached 
a  point  in  social  legislation  in  1838  which  Eng- 
land attained  with  much  difficulty  in  1880,  and 
Massachusetts  in  1887 ;  if  that  conception  of  the 
obligation  of  the  state  to  the  laboring  classes 
in  its  gradual  but  logical  development  in  the 
German  Empire  of  to-day  has  challenged  the 
attention  and  admiration  of  the  civilized  world, 
one  ought,  to-day  at  least,  to  discern  in  it  some- 


92  STATE  INSURANCE 

thing  of  the  grasp  and  prescience  of  true  states- 
manship. 

But  in  connection  with  the  remedies  which 
have  been  sought  to  mitigate  the  common- 
employment  doctrine  the  law  of  contributory 
negligence  must  be  considered.  This  has  al- 
ways borne  heavily  upon  the  workman.  It  is 
very  ancient.  It  has  been  said  that  "  it  has  ex- 
isted from  time  immemorial  and  is  not  likely 
to  be  changed  in  all  time  to  come."  ^  The 
reasoning  by  which  it  has  been  supported 
savors  more  of  the  refinements  of  mediaeval 
logic  than  of  modern  modes  of  thought. 
Contributory  negligence  is  the  slightest  w^ant 
of  ordinary  care  contributing  proximately  to 
the  in  jury.  2  If  a  workman  contributes  one 
per  cent  of  the  elements  which  go  to  make  up 
an  accident  and  the  employer  ninety-nine  per 
cent,  the  workman  cannot  recover.  Moreover, 
if  there  is  no  fault,  if  an  accident  is  simply 
an  incident  of  the  business,  le  risque  profes- 
sionnel,  or  attributable  to  superior  force,  these 
risks  the  laborer  is  deemed  to  have  assumed. 
Even,  further,  if  there  is  gross  fault  on  the 
part  of  the  employer,  if  certain  precautions 
have  been  neglected  by  him,  if  stringent  pro- 
visions of  law  have  been  flagrantly  violated, 
yet,  if  the  workman  knew  of  these  acts  of 

>  Black,  C.  J.,  Penn.  R.  R.  Co.  v.  Aspell,  23  Penn.  St.  149. 
'  Beach,  Contributory  Negligence,  3d  ed.  p.  23. 


INSURANCE  AND   COMPENSATION      93 

carelessness  or  violations  of  law,  he  is  pre- 
sumed to  have  waived  any  remedy.  He  is 
confronted  with  the  maxim,  volenti  non  fit 
injuria.  So  the  very  severity  of  treatment  in 
many  employments,  overwork,  excessive  hours, 
working  at  too  great  speed,  the  assenting  to 
labor  under  circumstances  of  great  danger 
because  required  to  do  so,  the  necessity  of 
satisfying  the  importunate  demands  of  over- 
seer or  master  as  bearing  upon  retention  or 
promotion,  —  the  elements,  in  a  word,  which 
make  care  diflScult  or  impossible, — have  all 
been  charged  up  to  the  workman;  the  stand- 
ard of  the  court-room  is  too  high  for  him ;  he  is 
found  to  have  been  wanting  in  ordinary  care 
and  remediless.  Under  these  conditions  there 
was  not  a  strong  inducement  for  the  employer 
to  exercise  care  in  the  construction  of  build- 
ings, in  the  arrangement  or  adjustment  of 
machinery,  in  safeguarding  the  workman. 
It  was  cheaper  to  let  him  take  his  chances; 
to  replace  the  killed  and  wounded  by  new 
recruits ;  to  treat  the  human  material  as  neg- 
ligible when  compared  with  the  cost  of  ex- 
pensive safeguards. 

Data  have  been  carefully  collected  from 
varied  and  widely  distributed  industries  to 
indicate  the  source  of  accidents  and  the  re- 
sponsibility for  them,  showing  that  nearly 
one  half  may  be  charged  to  the  risque  jrro- 


94  STATE  INSURANCE 

fessionnel  or  superior  force,  three  tenths  to 
the  fault  of  the  employee,  and  about  one  sixth 
to  that  of  the  employer.*  But  in  America  and 
England,  before  there  were  any  modifications 
of  the  law,  the  employer's  share  would  have 
been  much  greater.  Still,  it  has  been  esti- 
mated that  not  more  than  fifteen  per  cent  ever 
recovered  damages.  When  we  consider  the 
expense  of  litigation,  the  feeling  engendered 
between  employer  and  employee  and  conse- 
quent loss  of  any  future  employment,  it  can 
easily  be  seen  that  conditions  would  not  have 
been  much  worse  if  there  had  been  an  abso- 
lute denial  of  any  remedy. 

England  partially  awakened  to  the  gross 
injustice  resulting  from  these  conditions  about 
forty  years  ago.  The  evils  began  to  seem  in- 
tolerable. In  every  great  industrial  centre 
there  were  concrete  and  ever-recurring  illus- 
trations of  the  wrongs  inflicted.  But  it  took 
ten  years  of  agitation  and  discussion  to  effect 
the  passage  of  the  law  of  1880.^  It  must  be 
borne  in  mind  that  this  is  substantially  the 
same  as  the  law  of  Massachusetts  of  1887, 
which  is  still  in  force.  This  measure,  so  mild 
and  ineffectual  as  to  be  soon  discarded  as  an 
ill-fitting  garment,  was  strongly  opposed  by 
all  the  great  mining,  manufacturing,  and  rail- 

•  G.  A.  Klem,  Guide  to  Workmen's  Insurance,  p.  27. 
'  43  &  44  Vict.  c.  42. 


INSURANCE  AND   COMPENSATION      95 

road  interests.  Dire  disaster  was  predicted  if 
it  should  become  a  law ;  capitalists  would  not 
put  money  into  mines;  in  fact,  it  was  even 
discovered  that  it  would  be  a  plunge  into 
socialism ! 

But  this  law,  as  a  measure  of  social  equity, 
proved  utterly  inadequate.  The  agitation 
was  renewed.  Chamberlain  characterized  it 
as  a  half-hearted  compromise  and  suggested 
that  it  should  have  been  called,  in  view  of  the 
litigation  which  resulted,  "the  lawyers'  em- 
ployment bill."  *  Under  the  law  the  liability 
of  the  employer  was  almost  insusceptible  of 
proof,  and  the  defense  of  common  employment 
almost  sufficient  to  nonsuit.^  Asquith  declared 
that  it  was  an  elaborate  series  of  traps  and  pit- 
falls for  the  unwary  litigant,  barren  of  result, 
and  a  reproach  to  the  legislature.' 

The  tardy  awakening  of  England  to  the 
evils  of  the  industrial  situation  furnishes  a 
curious  and  instructive  illustration  of  the 
inertia  of  public  sentiment.  Forty  years  after 
the  decision  in  the  Priestly  case,  Mr.  Lowe, 
afterwards  Lord  Sherbrooke,  as  chairman 
of  a  parliamentary  commission  charged  with 
the  consideration  of  employers'  liability  legis- 
lation, reported:  "The  commission  are  war- 

1  Hansard,  1807,  vol.  xlv-iii.  p.  1465. 

*  Mavor,  Worlcmai's  Cumpensation,  p.  6. 

'  Hansard,  1897,  vol.  xli.x,  p.  753. 


96  STATE  INSURANCE 

ranted  in  regarding  these  judicial  innova- 
tions" (referring  to  the  Priestly  case  and  the 
doctrine  subsequently  developed  therefrom) 
*'  with  the  utmost  jealousy  and  dissatisfaction. 
They  observe  with  some  surprise  that  the  com- 
mon law  as  it  was  believed  to  be  up  to  1837 
has  been  entirely  altered  by  judicial  decision, 
and  that  not  in  any  abstruse  or  remote  point, 
but  in  a  matter  which  most  nearly  concerns 
Her  Majesty's  subjects  .  .  .  effected  by  means 
which  appear  to  the  commission  to  be  of  the 
most  questionable  nature,  the  inventing  and 
enforcing  a  contract  which  never  existed."  * 
Before  this  commission  Lord  Justice  Brett 
expressed  the  belief  that  there  was  no  just  and 
logical  reason  why  the  master  should  not  be 
liable  to  a  fellow  servant  and  that  the  doctrine 
arose  principally  from  the  ingenuity  of  Lord 
Abinger  in  suggesting  analogies.^  Sixty  years 
after  the  decision,  while  pleading  for  the  law 
of  1897,  Asquith  said  that  the  doctrine  was 
invented  by  the  bench,  and  was  developed  by 
the  ingenuity  of  judges;  that  it  had  been  a 
legitimate  grievance  to  the  working  classes  and 
had  established  fantastic  distinctions  between 
the  position  of  workmen  and  third  parties.' 
Birrell,  present    Secretary   for    Ireland,    ex- 

»  Pari.  Rep.  1877,  vol.  x,  no,  285,  p.  ix. 

»  Ibid.  p.  115. 

»  Hansard,  1897,  vol.  xlviii,  p.  1435. 


INSURANCE  AND  COMPENSATION      97 

pressed  himself  with  greater  emphasis :  "The 
doctrine  was  invented  in  1837;  Lord  Abinger 
planted  it;  Baron  Alderson  watered  it;  and 
the  Devil  gave  it  increase."  ^  The  social  un- 
rest of  which  these  discussions  were  the  index 
made  legislation  urgent.  A  bill  was  brought 
in  by  Asquith  in  1893  which  proposed  to 
abolish  the  common-employment  doctrine  vir- 
tually and  in  terms  negatived  the  application 
of  the  maxim  volenti  non  fit  injuria.  It  pro- 
posed to  include  substantially  all  workmen. 
The  bill  failed  through  the  opposition  of  the 
House  of  Lords  to  the  contracting-out  clause. 
It  has  been  pointed  out  that  there  was  thus 
a  very  narrow  escape  from  the  woes  which  the 
fervid  imagination  of  Lord  Abinger  had  pic- 
tured.^ It  remained  for  a  Tory  Government 
and  the  leadership  of  Chamberlain  in  the 
House  of  Commons  to  bring  about  substantial 
legislation  in  the  celebrated  Workingmen's 
Compensation  Act  of  1897.'  England  thus  put 
herself  in  the  ranks  —  though  by  no  means  in 
the  front  rank  —  of  civilized  nations  in  this 
kind  of  industrial  legislation.  They  had  been 
led  by  Germany  in  the  compulsory  insurance 
laws  of  1883-84,  which  instantly  challenged 
the  attention  of  all  the  nations  of  Europe.* 

'  Hansard,  1897,  vol.  xlix,  p.  692. 

'  A.  II.  Rucgg,  in  Century  of  Law  Reform,  p.  272. 

"60  &  61  Vict.  c.  57. 

*  A.  F.  Weber,  in  Political  Science  Quarterly,  xvii,  265. 


98  STATE  INSURANCE 

Laws  in  the  nature  of  compulsory  insurance  or 
workmen's  compensation  acts  were  enacted : 
In  Austria,  in  1887;  Norway,  1894;  Finland, 
1895;  France  and  Italy,  1898;  Switzerland, 
1899 ;  New  Zealand,  South  Australia  and  Spain, 
1900 ;  Sweden,  Netherlands,  and  Greece,  1901 ; 
British  Columbia  and  West  Australia,  1902; 
Russia,  Denmark,  and  Belgium,  1903;  Cape 
of  Good  Hope  and  Queensland,  1905;  and 
Hungary  in  1907.^ 

The  English  Law  applied  to  the  so-called 
dangerous  trades  and  extended  to  about 
half  of  the  workmen  of  the  kingdom  —  spe- 
cifically to  employees  of  railroads,  factories, 
mines,  quarries,  and  construction  and  razing 
of  buildings;  by  the  amendments  of  1900  and 
1901  those  engaged  in  agriculture  and  ship- 
lading  were  included.  As  to  the  employments 
to  which  the  law  applied,  it  practically  abol- 
ished the  common-employment  and  contrib- 
utory-negligence defenses  to  actions.  It  has 
been  said  that  while  it  did  not  —  in  terms  — 
abolish  the  common-employment  doctrine,  it 
went  far  beyond  its  abolition.^  It  left  in  force 
the  law  of  1880  and  the  common-law  reme- 
dies. 

In  Great  Britain  there  has  never  been  any 

*  Annuaire  de  Legislation  Etrangere,  1903;  G.  Zacher,  Tables,  vide 
Appendix  E ;  bulletin  No.  74,  January,  1908,  U.  S.  Bureau  of  Labor, 
pp.  121-143. 

'  A.  H.  Ruegg,  Employers  and  Workmen,  p.  139. 


INSURANCE  AND  COMPENSATION      99 

serious  intention,  either  from  the  standpoint 
of  employer  or  employees,  of  receding  from 
the  position  taken  in  1897;  but  there  has  been 
constant  agitation  and  discussion  as  to  liberal- 
izing the  law  and  enlarging  its  scope.  There 
as  in  other  countries  there  was  a  disposition  to 
make  of  less  importance  the  element  of  special 
danger  and  to  make  the  principle  of  the  law 
applicable  to  all  employments.  In  Belgium, 
under  the  law  of  1903,  about  nine  tenths  of 
the  working  population  were  included. 

Through  a  Parliamentary  Commission,  with 
Sir  Kenelm  Digby  as  chairman,  a  very  thor- 
ough and  exhaustive  examination  of  the  whole 
subject  was  made ;  a  large  amount  of  evidence 
was  taken;  the  working  of  the  law  of  1897  was 
carefully  reviewed ;  and  the  history  of  similar 
legislation  in  other  countries  was  presented.* 
On  the  basis  of  the  report  of  this  commission 
the  Workmen's  Compensation  Act  of  1906 
was  passed.  This  law  (which  went  into  effect 
on  July  1,  1907,  6  Edward  VII,  c.  58)  re- 
tains the  provisions  of  the  law  of  1897,  which 
it  repeals,  but  is  applicable  to  6,000,000  ad- 
ditional workmen,  and  virtually  includes  all 
workmen  where  the  relation  of  master  and 
servant  exists.'    It  had  been  said  of  the  law 

'  Pari.   Rep.   1904,    Cd.    2208;    Ibid.  1905.    Cd.    2269,    2334, 
2458. 

*  See  Appendix  III. 


100  STATE  INSURANCE 

of  1897  that  it  was  imported  from  Germany 
in  an  unmanufactured  state  and  inartistically 
made  up.^  The  law  of  1906,  as  well  as  that  of 
Belgium  and  some  other  countries,  indicates 
an  approach  towards  the  German  scheme. 
This  idea  found  expression  in  the  memoran- 
dum attached  to  one  of  these  reports:  "I  do 
not  believe,  however,  that  the  principle  of 
personal  liability  is  one  which  can  be  effect- 
ively applied,  especially  in  the  case  of  small 
employers,  unless  accompanied  by  compulsory 
insurance.  I  am  in  favor  of  compulsion,  pro- 
vided insurers  are  offered  national  insurance."' 
There  is  an  admirable  treatise  upon  the  Eng- 
lish act  of  1906,  giving  the  text  of  the  law, 
legal  decisions,  with  appendices  containing 
rules  of  procedure,  forms,  regulations,  offi- 
cial publications,  etc' 

It  is  perhaps  natural  that  the  United  States, 
and  especially  that  state  which  furnished  the 
great  jurist  who  pronounced  this  doom  upon 
English-speaking  laboring  men  the  world  over, 
have  clung  with  tenacity  to  this  common-em- 
ployment doctrine,  although  there  have  been 
many  attempts  from  the  beginning  to  mitigate 
its  severity.  Georgia,  as  early  as  1856,  by  a 
few  lines  of  legislation  annulled  the  common- 

*  Ruegg,  op.  cit.  p.  146. 

»  Mem.  of  Barnes,  Cd.  2208,  sup.  cit.  p.  131. 

•  A.  Elliott,  Workmen's  Compensation  Act  of  1906. 


INSURANCE  AND   COMPENSATION     101 

employment  doctrine  as  to  railroads  and  has 
legislated  against  both  that  and  the  contrib- 
utory-negligence doctrine  since.*  Recently 
Montana,^  and  Colorado/  have  abolished 
the  law  of  common  employment. 

During  the  interval  there  have  been  legis- 
lative as  well  as  judicial  protests  in  great 
variety:  sometimes  to  negative  what  seemed 
to  be  unwarranted  severity  in  judicial  inter- 
pretations; to  discriminate  between  the  habil- 
ity  for  the  negligence  of  a  vice-principal  and 
other  common  employee ;  to  introduce  a  rule 
of  comparative  negligence,  analogous  to  that 
in  maritime  law,  in  place  of  the  severe  rule  of 
contributory  negligence. 

It  is  not  proposed  to  give  here  any  sketch 
of  legislation  upon  these  points;  it  has  been 
summarized    recently    in    convenient    form.* 

Yet  it  is  undoubtedly  true,  as  has  been 
stated  by  competent  authority,  that  the  posi- 
tion of  workmen  in  regard  to  compensation 
for  injuries  is  not  yet  so  advanced  as  it  was  in 
England  under  the  law  of  1880,  and  incom- 
parably less  advanced  than  in  Germany,''  and 

>  Georgia  Laws,  1855-56,  p.  156,  Appendix  B;Code,  1895,  sees. 
£321-2323. 

'  Laws  of  1905,  ch.  1.  '  Laws  of  1901.  ch.  G7. 

*  Bulletin  No.  74,  January,  1908,  U.  S.  Bureau  of  Labor,  pp. 
1-156;  N.  Y.  Dept.of  Labor,  Bulletin  of  Marcli,  1906,  pp.  91-97; 
Sir  K.  E.  Disbv  in  Yale  Tmiv  Journal,  xvii,  485. 

'  A.  Shadwcll,  Industrial  Efficiency,  ii,  170;  VV.  F.  Willoughby, 
Workmen's  Insurance,  p.  328. 


102  STATE  INSURANCE 

that  the  United  States  stands  alone  among  the 
civilized  nations  of  the  world  in  adhering  to 
the  law  of  negligence  as  a  solution  of  the  pro- 
blem of  industrial  accidents,  while  the  govern- 
ments of  Europe  and  Australia  have,  with 
one  or  two  unimportant  exceptions,  made  the 
financial  burden  of  injuries  to  workmen  a 
charge  upon  the  particular  industry/ 

In  Massachusetts,  where  the  common-em- 
ployment doctrine  seems  to  have  developed 
far  beyond  the  intention  of  its  great  author, 
the  subject  attracted  much  attention  a  gen- 
eration ago,  undoubtedly  stimulated  in  some 
degree  by  the  parliamentary  and  other  dis- 
cussions in  England  and  the  passage  of  the 
Act  of  1880.  In  1882  the  legislature  directed 
the  Bureau  of  Labor  to  investigate  and  report 
its  conclusions.  There  was  a  thorough  inves- 
tigation under  Carroll  D.  Wright,  resulting  in 
an  admirable  report  to  the  legislature  of  1883, 
in  which  the  situation  was  discussed  thor- 
oughly in  all  its  bearings.  It  was  recommended 
that  a  law  should  be  enacted  either  like  the 
English  statute  or,  preferably,  a  very  simple 
and  brief  law  abolishing  the  defense  of  com- 
mon employment  and  materially  modifying 
that  of  contributory  negligence.  Four  years 
later,  in  1887,  a  law  was  enacted  which  was 
substantially  the  English  act.    It  had  been 

*  N.  Y.  Labor  Bulletin,  sup.  cit.  pp.  7  and  95. 


INSURANCE  AND  COMPENSATION     103 

adopted  in  Alabama  four  years  earlier.^  That 
legislation  is  still  in  effect  practically.  While 
in  England  it  proved  very  unsatisfactory  to 
all  parties  after  a  very  brief  trial,  we  have  not 
materially  amended  it.  In  1903  the  subject  was 
again  up  for  consideration  in  Massachusetts 
and  a  select  committee  was  provided  for,^  to 
consider  this  among  other  labor  questions.  In 
its  report  (January,  1904)  a  bill  was  recom- 
mended' patterned  after  the  English  Work- 
man's Compensation  Act  of  1897.  It  reads 
like  a  convincing  document,  but  apparently  re- 
ceived scant  consideration  from  the  legislature. 
Again,  in  1907,*  a  recess  committee  made  up 
from  members  of  the  legislature  to  consider 
labor  questions  was  appointed,  to  report  to  the 
next  legislature.  In  this  report^  the  majority 
of  the  committee  ^  oppose  any  substantial  legis- 
lation towards  providing  for  compensation  to 
workmen.  They  repeat,  with  much-diminished 
force,  the  stock  arguments  of  a  generation 
ago,  which  have  become  threadbare  and  much 
discredited.  To  these  brief  reference  will  be 
made  later.  The  minority  of  the  committee 
renew  the  recommendation  of  the  commit- 
tee of  1903  that  the  substance  of  the  Eng- 
lish law  be  enacted  or  that  there  be  a  brief 

'  Civil  Code,  1907,  sec.  3910.  '  Res.  1903,  ch.  87. 

'  Rep.  pp.  47-55.  *  Senate  Journal,  p.  1165. 

5  House  Doaiment.  no.  1190,  January,  1908. 
'  Report,  pp.  49-GO. 


104  STATE  INSURANCE 

law  taking  away  the  defense  of  common  em- 
ployment.* 

But  in  this  country  we  are  still  powerfully 
dominated  by  the  dogmas  pronounced  by 
Judge  Shaw  two  generations  ago.  He  was 
profoundly  impressed,  as  his  defenders  and 
imitators  have  been  ever  since, ^  by  a  sense  of 
the  great  injustice  that  the  employer  would 
suffer  if  held  liable  for  an  accident  which  he 
could  not  have  prevented.  It  is  obvious 
enough  to-day  that  there  are  three  parties  to 
be  considered  in  the  event  of  an  industrial  ac- 
cident affecting  w^orkmen :  the  victim,  the  em- 
ployer, and,  third,  the  patron,  the  consumer, 
society.  We  cannot  judge  justly  if  we  fix  our 
minds  too  intently  upon  any  one  of  these  to 
the  neglect  of  the  others.  We  should  follow 
the  injunction  by  Lord  Abinger  in  the  Priestly 
case  and  "look  at  the  consequences  of  a 
decision,"  the  bearing  upon  each  of  these 
three  parties.  All  serious  accidents  to  work- 
men involve  hardship  and  a  burden  which 
must  rest  somewhere.  By  picturing  too  vividly 
the  possible  consequences  to  one  of  these  par- 
ties we  may  practically  ignore  the  others.  We 
can  conceive  of  a  case  of  novel  impression 
being  so  nicely  balanced  that  either  one  of  two 
decisions  may  be  defensible  as  a  matter  of  pure 

»  Report,  pp.  61-76. 

'  e.  g.  Judge  Dillon,  American  Law  Review,  xxiv,  175, 


INSURANCE  AND   COMPENSATION     105 

legal  formalism,  but  if  we  make  law  either  as 
legislators  or  judges  we  must  have  some  regard 
for  economic  and  ethical  considerations.  In 
neither  case  can  the  law  determine  the  real  in- 
cidence of  the  burden.  If  it  is  imposed  upon 
the  workman  who  is  injured  and  who  is  pro- 
pertyless,  whose  working  capacity,  now  ruined 
or  impaired,  was  his  only  asset,  he  must  turn 
it  over  to  society  upon  whom  he  and  his  family 
must  depend ;  if  imposed  upon  the  employer  it 
may  either  result  in  a  diminution  of  dividends 
and  profits,  or  be  added  to  the  pi  ice  of  the  pro- 
duct as  a  part  of  the  cost,  thus  reaching  so- 
ciety again  by  another  route.  Still,  it  is  of  the 
greatest  economic  and  social  consequence  by 
which  route  the  burden  takes  its  course  before 
reaching  society,  or  any  portion  of  the  public. 
Meantime  we  cannot  ignore  as  negligible  those 
industries  which  yield  large  profits  and  yet 
insist  that  it  is  not  socially  inequitable  for  the 
profit  sharers  to  use  this  human  material,  im- 
providently  often,  and  afterwards  throw  the 
wrecks  upon  society. 

The  employer  tells  us  that  the  cost  of  ac- 
cidents cannot  be  added  to  the  charge  for  the 
traffic  or  product,  as  it  would  make  that  cost 
too  high.  This  is  nearly  equivalent  to  saying 
that  while  the  public  is  not  willing  to  pay  this 
enhanced  cost  as  such,  it  will  submit  if  it  is 
disguised  in  the  form  of  poor-rates.    We  are 


106  STATE  INSURANCE 

admonished,  too,  that  the  state  or  government 
which  puts  such  a  burden  upon  industry  will 
be  at  a  great  economic  disadvantage  as  com- 
pared with  other  states,  practically  a  claim 
that  the  industry  is  not  self-supporting,  that  it 
is  parasitic.  These  arguments  are  not  new. 
Thirty  years  ago  the  same  arguments  were 
used  in  Great  Britain.  The  legislation  then 
proposed,  substantially  the  present  law  of 
Massachusetts,  was  certain  to  drive  capital 
from  the  country,  to  close  mines,  to  paralyze  in- 
dustry. The  Attorney- General  in  1876  pointed 
out  the  terrible  liabilities  that  it  would  throw 
upon  the  country ;  ^  but  neither  that  law  nor 
the  "revolutionary"  compensation  act  of  1897 
seems  to  have  had  that  result.  A  little  more 
recently  the  same  appeal  was  made  in  Ger- 
many against  the  proposed  compulsory  insur- 
ance legislation.  But  it  has  not  been  heard 
since,  and  the  German  Empire  has  had  a  phe- 
nomenal period  of  development  and  industrial 
prosperity  such  as  no  nation  ever  surpassed. 
It  has  been  claimed  by  very  high  authority 
that  the  cause  of  this  material  progress  and 
general  well-being  of  the  working  classes  is 
largely  attributable  to  the  beneficence  of  these 
very  laws.^    These  adverse  arguments  do  not 

»  N.  Y.  Bureau  of  Labor  Statistics  (1899),  p.  677. 

'  A.  Shadwell,  op.  cit.  ii,  147;  F.  W.  Zahn,  German  Workmen's 
Insurance,  pt.  5,  p.  21 ;  F.  A.  Vanderlip,  in  North  American  Review, 
clxxxi,  925. 


INSURANCE  AND  COMPENSATION     107 

take  into  account  the  immense  value  of  meas- 
ures that  tend  towards  social  peace ;  the  im- 
portance of  impressing  upon  employers  the 
economic  profit  of  saving  life  and  limb;  the 
wastefulness  of  litigation  and  contention 
resulting  from  a  mischievous  legal  or  indus- 
trial system;  the  fact  that  rational  legislation 
is  contagious  and  that  other  states  would  be 
disposed,  compelled,  to  follow  an  inspiring 
example,  as  the  nations  of  Europe  have  fol- 
lowed Germany. 

Clearly,  it  would  seem,  the  workman  should 
be  compensated  for  accidents  that  befall  him 
through  the  fault  of  his  employer;  through 
the  inevitable  risks  of  the  industry;  through 
superior  force;  through  the  fault  of  a  fel- 
low workman.  But  there  are  some  that  come 
through  his  own  negligence  —  about  three 
tenths  or  one  fourth  of  the  whole,  perhaps.* 
Why  in  any  view  of  the  case  ought  he  to  be 
compensated  for  these .?  Ordinary  care,  as 
judged  by  juries  under  the  instructions  of 
courts,  really  comes  to  mean  such  care  as  the 
average  man  would  exercise  —  as  high,  prob- 
ably higher.  The  juror,  in  the  quiet  of  a  court- 
room, probably  very  much  overestimates  the 
presence  of  mind  that  he  would  be  capable  of 
in  an  emergency,  the  occasion  when  accidents 
occur.    If  we  have  an  industry  requiring  a 

'  G.  A.  BQein,  German  Workmen's  Insurance,  pt.  •2,  p.  27. 


108  STATE  INSURANCE 

thousand  workmen,  presumably  five  hundred 
of  them  would  fall  below  the  standard  by 
which  they  must  be  tested.  They  have  been 
selected  for  their  working  capacity  and  not  for 
the  alertness  of  mind  by  which  they  avoid 
accidents.  But  these  five  hundred  men  must 
work,  and  any  impairment  of  the  individual's 
efiBciency  or  inability  to  work  on  account  of 
injuries  even  through  his  lack  of  ordinary  care 
—  of  which  he  is  not  quite  capable  —  must 
be,  in  the  nature  of  things,  a  part  of  the  total 
cost  of  the  industry.  To  what  other  account 
can  it  be  charged  ?  It  cannot  be  charged  to  the 
individual,  because  by  that  very  injury  he  has 
probably  become  bankrupt.  We  must  revert 
to  the  maxim  that  "the  blood  of  the  workman 
is  a  part  of  the  cost  of  the  product."  Obvi- 
ously if  an  industry  cannot  endure  that  burden 
it  is  not  self-sustaining.  Society  for  its  own 
sake  and  that  of  the  individual  must  so  regard 
it.  No  other  solution  of  the  problem  satisfies 
intelligent,  modern  conceptions  of  social  ob- 
ligations. 

It  is  surprising  that  the  world  should  have 
been  so  slow  to  perceive  how  grievous  and 
unjust  the  law  is  which  has  attempted  to 
impose  this  burden  of  accidents  upon  the 
workman ;  slow  to  realize  how  vain  and  im- 
potent this  attempt  has  been;  slow  to  profit 
by  the  instructive  example  that  Germany  has 


INSURANCE  AND  COMPENSATION     109 

shown  us  for  a  quarter  of  a  century.  We  in- 
dulge in  illusions.  We  look  on  complacently, 
persuading  ourselves  that  we  have  compelled 
the  workman  to  assume  risks  and  to  provide 
in  some  way  for  future  emergencies  out  of  his 
wages,  ignoring  the  fact  that  the  burden  of 
such  risks  must  virtually  be  borne  by  society. 
The  recent  report  of  the  recess  committee  in 
Massachusetts  referred  to,  terms  society's  re- 
sponse beneficence'  and  looks  upon  the  pro- 
visions which  most  civilized  nations  have  made 
as  munificent.^  But  the  workman  who  is  suf- 
fering injustice  from  industrial  and  economic 
conditions  does  not  wish  to  seem  to  be  the 
recipient  of  beneficence  as  a  substitute  for 
justice. 

The  appalling  colliery  disasters  in  Great 
Britain  during  the  sixties  awakened  that  na- 
tion. Her  statesmen  and  legislators  began  to 
inquire  whether  the  market  price  of  coal  re- 
presented the  real  cost,  and  also  whether  the 
employers'  exemption  from  liability  as  to  these 
disasters  might  not,  in  some  degree,  account 
for  their  frequency.  Employers'  liability  acts 
were  advocated  not  only  with  the  purpose  of 
securing  compensation  for  the  victims  of  ac- 
cidents, but  with  the  expectation  of  diminish- 
ing their  number  and  severity.  The  great  cry 
of  the  workmen   themselves  was,  We  want 

'Report,  p.  53.  '  Report,  p.  54. 


110  STATE  INSURANCE 

immunity  rather  than  indemnity.  It  was  the 
claim  of  Salisbury,  during  whose  primacy  the 
law  of  1897  was  passed,  that  it  would  prove 
a  life-saving  mechanism.  We  may  well  re- 
gard this  aspect  of  the  question  in  this  country 
where  industry  is  carried  on  with  less  regard 
for  human  life  and  safety  than  in  most  others. 
Viewed  in  its  merely  commercial  aspects,  a 
nation  cannot  afford  unnecessary  waste  of  life. 
It  has  been  estimated  that  it  costs  fifteen  hun- 
dred dollars  to  rear  the  boy  and  youth  until 
he  reaches  the  age  for  work ;  he  becomes  too 
costly  a  piece  of  mechanism  to  be  exposed  to 
needless  hazards ;  in  the  highest  sense,  the  life 
and  health  of  the  workman  are  proper  sub- 
jects of  the  state's  solicitude.  Considerations  of 
economy  and  philanthropy  alike  demand  not 
only  that  accidents  shall  be  guarded  against, 
but  that  their  consequences,  unjust  to  the  vic- 
tim, shall  as  far  as  possible  be  averted. 


VI 

EXISTING  INSTITUTIONS 

In  the  consideration  of  the  problem  involved, 
—  provision,  more  especially  by  or  in  behalf 
of  the  more  needy  and  helpless  members  of 
a  community,  for  the  exigencies  of  sickness, 
accidents,  and  invalidity,  —  account  must  be 
taken  of  existing  institutions.  Are  any  of  them 
or  all  of  them  together  sufficient  to  furnish  a 
solution  of  the  problem  ?  If  inadequate,  what 
are  their  limitations  and  defects  ? 

Savings  banks  are  very  promptly  and  con- 
fidently offered  as  a  panacea  for  all  of  the 
industrial  or  financial  ills  which  may  overtake 
those  who  have  made  no  other  provision  for  the 
future.  But  they  are  entirely  inadequate  and 
unsuitable,  as  a  moment's  consideration  will 
show.  There  is  not  much  in  common  between 
savings  banks  and  a  system  of  insurance.  De- 
posits are  made  in  savings  banks  in  the  hope 
of  continued  life,  health,  and  earning  capacity, 
but  insurance  is  undertaken  with  a  realization 
of  the  uncertainty  of  all  of  these  things.  The 
slow  accumulations  of  savings,  however  stead- 
fastly adhered  to,  cannot  supply  a  fund  which 
may  be  needed  to-morrow  on  account  of  a 
sudden  and  unforeseen  misfortune;  but  by 


112  STATE  INSURANCE 

insurance  the  workman,  if  his  earning  capac- 
ity admits  of  any  saving,  may  provide  for  all 
contingencies  and  industrial  risks,  even  if  they 
arise  to-morrow.  The  purpose  of  insurance  is 
to  distribute  the  misfortune  of  the  one  among 
the  many,  and  no  individual  effort  of  any 
nature  can  supply  its  place.  Reference  has 
already  been  made  to  the  misleading  charac- 
ter of  the  savings-bank  data  usually  cited,  and 
the  undue  importance  which  has  been  assigned 
to  such  data,  either  as  indications  of  general 
prosperity  or  as  bearing  upon  the  need  of  a 
more  general  insurance  for  workmen.  In  the 
discussion  of  a  broader  insurance  for  those 
most  needing  it,  the  savings  bank  hardly  con- 
cerns us. 

Even  in  the  matter  of  provision  for  old  age 
the  savings  bank  has  a  certain  disadvantage 
as  compared  with  insurance.  The  man  of 
scanty  earnings,  for  whom  any  saving  is  dif- 
ficult, does  not  need  to  make  provision  for  old 
age,  but  merely  for  the  probability  of  the  in- 
validity which  comes  with  old  age.  It  costs  a 
man  at  twenty-five  or  thirty  only  about  one 
half  as  much  to  provide  for  the  contingency  of 
old  age,  through  a  purchase  of  an  annuity,  as 
it  would  to  provide  for  the  certainty  by  a  sav- 
ings-bank deposit.  The  workman  who  cannot 
save  enough  out  of  his  wages  for  the  latter 
may  provide  for  the  former;  in  other  words, 


EXISTING   INSTITUTIONS  113 

he  can  make  twice  as  liberal  provision  by  way 
of  annuity  as  by  a  deposit  in  a  savings  bank. 
At  the  age  of  twenty  it  would  cost  to  purchase 
a  deferred  annuity  of  $100,  to  commence  at 
the  age  of  sixty-five,  only  $6.50  per  annum,  or 
$123.20  in  a  lump  sum,  in  a  New  England 
company.^  But  it  would  require  a  savings-bank 
deposit  of  $235  at  the  same  age  to  raise  the 
same  annuity,  computing  interest  at  three  per 
cent.  The  advantages  of  the  savings  deposit 
are  obvious,  in  some  aspects ;  but  scientifically 
considered,  either  from  the  standpoint  of  the 
individual  or  of  society,  the  annuity  plan,  or 
insurance,  satisfies  the  requirements  in  the  case 
of  the  workman  whose  wage  is  little  above  the 
"absolute  minimum"  of  the  cost  of  living,  and 
the  savings  bank  does  not. 

The  conception  of  mutual  self-help  is  nat- 
ural and  the  practice  is  very  ancient.  Burial 
societies  in  China,  the  eranoi  of  the  Greeks, 
the  guilds  of  the  Teutons  in  media?val  times, 
all  speak  of  the  human  tendency  towards  asso- 
ciation for  fellowship  and  for  mutual  aid  in 
times  of  adversity.  They  lacked  much  in  sys- 
tem and  orderly  adjustment,  but  they  indi- 
cated a  strong  social  instinct  groping  towards 
the  light.  Associations  more  nearly  resem- 
bling modern  institutions  are  also  of  long 
standing.   In  some  parts  of  Germany  miners' 

'  In  France  it  would  cost  only  $102.81  (W.  F.  Willoughby,  p.  121). 


114  STATE  INSURANCE 

sick-clubs  (Knappschaftskassen)  maybe  traced 
back  six  hundred  years.* 

Organizations  were  formed  in  Great  Britain 
soon  after  the  disappearance  of  the  guilds, 
having  a  somewhat  uniform  origin,  constitu- 
tion, and  purpose,  which  have  come  to  be 
known  as  Friendly  Societies.  They  date  from 
about  the  beginning  of  the  eighteenth  century, 
and  in  their  present  form  are  said  to  have  been 
influenced  largely  by  societies  in  London 
formed  by  the  Huguenot  refugees.  As  early  as 
1793  they  were  recognized  by  statute,  and  re- 
ferred to  as  "societies  of  good  fellowship  " ;  and 
again  in  1819  where  the  society  is  defined  as 
"an  institution  whereby  it  is  intended  to  pro- 
vide, by  contribution,  on  the  principle  of  mu- 
tual insurance,  for  the  maintenance  or  assist- 
ance of  the  contributors  thereto,  their  wives  or 
children,  in  sickness,  infancy,  advanced  age, 
widowhood,  or  any  other  natural  state  or  con- 
tingency whereof  the  occurrence  is  susceptible 
of  calculation  by  way  of  average."  These 
two  features  of  good  fellowship  and  mutual 
aid  have  always  been  preserved.  It  is  probable 
that  they  engaged  the  attention  of  legislators 
at  that  date  both  on  account  of  their  possibil- 
ities for  good  and  the  abuses  of  which  they 
were  susceptible.  Since  that  time  they  have 
often  been  the  subject  of  legislation,  but  with 

'  L.  Lass,  in  German  Workmen's  Insurance,  pt.  1,  p.  12. 


EXISTING  INSTITUTIONS  115 

a  view  to  guide  rather  than  to  control  them. 
They  were  originally  organized  with  very  little 
system,  and  were  loosely  and  unscientifically 
managed.  While  beneficent  in  their  declared 
purposes  and,  in  the  best  societies,  in  their 
work,  great  abuses  arose.  Ten  or  twelve  acts 
of  Parliament  culminated  in  those  of  1875  and 
1896.  Partly  through  the  persuasive  effect  of 
these  laws  and  partly  through  the  initiative  of 
some  of  the  sounder  societies  like  theManches- 
ter  Unity,  the  general  situation  has  improved 
to  some  extent.  These  statutes  provide  for 
registration  and  offer  many  inducements,  but 
it  is  still  optional,  and  less  than  one  half  of  the 
societies  of  the  kingdom  are  registered.  The 
registered  societies  are  required  to  make  an- 
nual statements,  quinquennial  reports  upon 
mortality,  and  quinquennial  valuations. 

These  societies  furnish  an  interesting  study 
in  social  science  and  illustrate  the  evolution  of 
a  semi-scientific  institution  from  the  merely 
benevolent  organizations  of  the  earlier  day. 
They  form  to-day  a  type  of  voluntary  associa- 
tions, the  best,  perhaps,  for  their  purpose,  in 
existence,  when  found  at  their  best.  For  this 
reason  they  must  enter  into  our  consideration 
of  systems  of  insurance. 

But  there  is  another  side  to  the  picture. 
Notwithstanding  the  attempts  to  regulate 
these  societies  and  to  place  them  on  a  better 


116  STATE  INSURANCE 

and  sounder  basis,  there  can  be  no  assurance 
of  the  competency  or  the  honesty  of  their 
management.  Canon  Blackley  said  of  them 
that  while  some  were  founded,  supported,  and 
managed  in  ignorance,  a  large  class  were  fos- 
tered and  carried  on  by  systematic  and  delib- 
erate villainy.*  There  could  be  no  guaranty  of 
their  soundness  or  their  permanence.  Out  of 
48,000  such  societies  which  had  existed  there 
seemed  to  remain  only  26,000  when  the  Act  of 
1875  went  into  effect,  and  of  these  only  11,000 
responded  to  the  registrar's  call  for  returns. 
There  had  been  a  widely  prevalent  disregard 
of  proper  bases  of  computation  for  contribu- 
tions, assessments,  and  benefits,  and  a  large 
proportion  of  all  of  the  societies  have  usually 
been  actuarially  insolvent,  —  in  1884,  five 
sixths  of  the  whole. ^  In  1895  Chamberlain 
declared  that  their  aggregate  deficiencies 
amounted  to  $35,000,000. «  Eight  years  later, 
in  spite  of  warnings,  it  appeared  by  the  report 
of  the  chief  registrar  that  seventy  per  cent  of 
the  registered  societies  disclosed  deficiencies, 
and  collectively  they  could  not  pay  more  than 
eighty-three  per  cent  of  their  liabilities.*  Pre- 
sumably the  condition  of  the  unregistered  so- 
cieties is  much  worse. 

*  W.  J.  Blackley,  Thrijt  and  Independence,  pp.  75,  80. 

*  Blackley,  op.  oil.  pp.  GO,  105.       ^  National  Review,  xxiv,  592. 
»  Report,  December,  1903,  p.  64. 


EXISTING   INSTITUTIONS  117 

Moreover,  the  wage-earner  may  well  be 
diffident  as  to  the  probability  of  his  persistence 
in  these  and  similar  societies.  He  should  give 
weight  to  the  statistics  which  indicate  that 
probability.  It  has  been  found  that  out  of 
100,000  joining  at  18  there  will  be,  without 
allowing  for  secession,  71,353  remaining  in 
the  society  at  50;  but  if  allowance  be  made 
for  secession,  there  will  be  only  15,325.  In 
other  words,  while  the  claims  of  28,647  had 
been  paid  at  death,  56,028 — about  two  thirds 
—  had  left  voluntarily.^ 

We  may  say  of  these  societies  and  all  others 
having  similar  defects  and  characteristics  that 
they  are  not  necessarily  upon  a  sound  actu- 
arial basis ;  that  many  of  them  are  conducted 
at  a  very  great  expense  relative  to  receipts, 
the  collecting  societies  which  deal  with  the 
lower  class  of  wage-earners  often  expending 
more  than  one  half  of  their  contributions; 
that  legislation,  both  in  England  and  else- 
where, fails  to  control  or  direct  them  so  as 
to  give  substantial  protection  to  members; 
that  the  uncertainty  and  financial  insecurity 
are  such  as  to  discourage  rather  than  to  fos- 
ter thrift;  that  as  a  system  they  constitute  a 
crude,  inadequate,  wasteful  method  of  reach- 
ing a  great  social  need;   and  that  by  their 

'  Insurance  and  Savings;  Report  of  Charity  Organization  Society 
of  London,  1892,  p.  58. 


118  STATE  INSURANCE 

existence  they  often  preclude  the  introduction 
of  something  far  better  than  they  can  offer. 

Trade-unions  offer  mutual  benefit  features 
somewhat  similar  to  those  of  friendly  so- 
cieties, but  that  is  not  the  main  object  for 
which  they  are  created.  The  criticisms  which 
apply  to  friendly  societies  are  applicable  to 
these  also,  but  the  defects  in  them  are  even 
greater.  The  promises  of  the  trade-unions  as 
to  the  relief  of  members  are  necessarily  con- 
ditional upon  the  state  of  funds  at  the  mo- 
ment. These  may  have  been  exhausted  at  the 
moment  when  they  are  most  urgently  needed 
for  relief  purposes.  The  insecurity  of  the 
friendly  side  of  trade-unionism  is  inherent  in 
the  conjunction  of  trade  and  friendly  purposes, 
but  at  the  same  time  the  insurance  feature 
adds  to  the  attractiveness  and  cohesiveness 
of  the  union  and  creates  among  its  members 
a  strong  opposition  to  government  insur- 
ance.* 

This  attitude  of  trade-unions  and  labor  or- 
ganizations towards  state  insurance  is  short- 
sighted. Beyond  doubt  a  well-devised  system 
of  workmen's  insurance,  modeled  perhaps 
after  that  in  Germany,  would  do  much  for 
the  cause  of  the  wage-earner  for  the  reasons 
elsewhere  referred  to.  It  was  the  declared 
purpose  of  William  I,  the  German  Emperor, 

*  S.  &  B.  Webb,  Industrial  Democracy,  ii,  629,  531, 


EXISTING  INSTITUTIONS  119 

in  urging  Bismarck's  plan  upon  the  German 
Reichstag,  to  promote  the  welfare  of  the  work- 
ing classes,  and  after  a  trial  of  twenty-five 
years  his  hopes  as  to  the  eflBcacy  of  the  scheme 
have  been  fully  realized.  In  this  view  the  So- 
cial-Democratic party  in  Germany  fully  concur. 
There  has  been  a  growing  conviction  among 
all  classes  of  the  German  people,  as  expressed 
by  a  competent  authority,  that  '*the  tasks  of 
social  improvement  fulfilled  by  the  German 
workmen's  insurance  can  neither  be  accom- 
plished by  a  development  of  voluntary  self- 
help,  nor  by  an  improved  legislation  on  the 
employer's  liability,  nor  by  voluntary  insur- 
ance." *  These  significant  words  are  indorsed 
by  many  economists  the  world  over  and  are 
entitled  to  the  thoughtful  consideration  of 
every  wage-earner  and  of  all  interested  in  his 
welfare. 

Somewhere  between  friendly  societies  and 
the  mutual-benefit  side  of  trade-unions  must 
rank  the  various  forms  of  brotherhoods,  frater- 
nal and  similar  associations  in  this  and  other 
countries.  The  criticisms  to  which  friendly  so- 
cieties are  subject  apply  a  fortiori  to  all  such 
organizations.  Their  instability,  the  lack  of 
persistence  on  the  part  of  their  members,  and 
their  general  disregard  of  scientific  bases  of 
computation,  render  them   simply  unworthy 

*  L.  Lass,  in  German  Workmen's  Insurance,  pt.  1,  p.  80. 


120  STATE  INSURANCE 

of  consideration  in  connection  with  a  broad 
and  general  scheme  of  insurance. 

The  relief  departments  of  large  corporations 
or  other  employers  belong  to  a  distinct  class. 
They  owe  their  origin  possibly  to  the  very 
successful  operation  of  such  a  department  in 
the  Krupp  Works  at  Essen,  established  in 
1853,  which  in  turn  was  probably  suggested 
by  the  miners'  associations  elsewhere  re- 
ferred to.  They  vary  much  in  their  manage- 
ment and  purposes.  Generally  speaking,  they 
aim  to  furnish  surgical  aid,  pay  during  dis- 
ability resulting  from  accidents,  sick-pay,  su- 
perannuation allowances,  and  death  benefits. 
In  some  of  these,  as  in  the  department  of  the 
Baltimore  and  Ohio  Railroad,  membership 
is  compulsory ;  this  was  the  case  at  Ki'upp's 
even  before  the  compulsory  insurance  law;^ 
in  others  (as  the  Pennsylvania  Railroad) ,  and 
more  commonly,  it  is  voluntary.  In  some  of 
them  the  workmen  are  represented  on  the  ex- 
ecutory or  advisory  boards  or  committees,  but 
only  as  a  minority;  the  employer  retains  con- 
trol. In  so  far  as  the  employer  retains  control, 
supplies  deficiencies  in  the  fund,  assumes  all 
expenses  of  management,  holds  and  manages 
all  trust  funds  and  holds  himself  responsible 
for  them,  and   invites  contributions  to  such 

*  P.  P.  J.  Krupp,  Acierie  de  M.  Krupp  h  Essen.  Statuts,  1855, 
sec.  2,  p.  9. 


EXISTING  INSTITUTIONS  121 

fund  from  the  outside,  there  would  seem  to 
be  a  distinctly  paternal,  not  to  say  charitable, 
quality  in  such  relief  departments.^  An  of- 
ficial of  one  of  these  entitled  his  address 
upon  this  subject  on  one  occasion :  '*  What 
the  Pennsylvania  Railroad  Company  is  doing 
for  the  benefit  of  its  Employees."  ^  Probably 
there  will  usually  be  found  somewhere  in 
connection  with  the  plan  a  distinct  admoni- 
tion that  the  department  is  not  self-supporting. 
Perhaps  this  very  fact  appeals  to  the  more 
tractable  class  of  workmen ;  they  may  comfort 
themselves  with  the  theory  that  this  is  an  in- 
direct acknowledgment  that  there  is  a  residue 
of  obligation  due  them  from  the  corporation 
or  the  public,  which  is  thus  adjusted.  The 
more  captious  question  the  altruistic  motives 
of  the  employer  and  sometimes  suspect  that 
these  measures  are  designed  to  attach  em- 
ployees more  strongly  and  thus  weaken  their 
own  organizations.  The  compulsory  feature 
has  not  met  with  favor  among  workmen,  but 
it  would  seem  obvious  that  the  best  results 
could  be  gained  if  the  membership  were  made 
obligatory  upon  all. 

These  relief  departments  have  been  un- 
doubtedly of  very  great  value  in  relieving 
distress    and   in  promoting    thrift  and   good 

*  Regulations,  Penn.  R.  R.  Relief  Dept.  1906.  pp.  14,  19. 
'  M.  Riebenach,  before  the  Economic  Club,  Boston. 


122  STATE  INSURANCE 

feeling  between  employees  and  employers; 
they  have  had,  too,  a  moral  effect  beyond  their 
most  direct  results ;  they  reach,  however,  even 
in  the  case  of  the  railways  of  the  country, 
only  a  small  portion  of  the  roads  and  em- 
ployees. In  1904  the  railroad  relief  depart- 
ments extended  to  only  about  one  fifth  of  the 
roads  and  one  sixth  of  all  employees/ 

Furthermore,  to  the  economist  who  looks 
for  the  ultimate  assumption  of  all  such  in- 
surance by  the  state,  these  institutions  seem 
to  be  merely  a  step  in  the  evolution  of  govern- 
ment insurance ;  they  seem  merely  to  demon- 
strate in  miniature  what  might  be  done  on  a 
larger  scale.  What  the  corporation  has  done 
fairly  well  the  state  might  do  far  more  effect- 
ively through  its  larger  powers.  If  insurance 
compulsory  upon  all  employees  of  a  given  rail- 
road has  proved  practical  and  highly  beneficial, 
that  fact  suggests  at  least  the  practicability  of 
insurance  of  all  workmen  through  compulsion 
exercised  by  the  state. 

It  is  claimed  by  its  advocates  that  indus- 
trial insurance,  so  called,  supplies  to  a  large 
extent  what  other  institutions  lack  in  pro- 
vision for  the  needs  of  the  workmen  whose 
wages  are  low.  It  has  been  urged  quite  plaus- 
ibly that  these  industrial  insurance  companies 

*  M.  Riebenach,  Address  before  National  Civic  Federation,  New 
York,  1904. 


EXISTING  INSTITUTIONS  123 

are  highly  beneficent  social  institutions.*  But 
in  this  view  disinterested  economists  who 
have  thoroughly  studied  the  question  do  not 
concur.  One  of  them  well  says:  "That  this 
form  of  insurance  is  permitted  with  all  its 
abuses  and  deceptions  is  strong  proof  that  the 
principles  of  Spencerian  individualism  still 
dominate  this  country."  ^  The  same  writer 
expresses  the  opinion  of  all  intelligent  observ- 
ers who  are  disinterested,  in  characterizing 
such  insurance  as  little  better  than  robbery 
under  the  forms  of  law,  and  an  exploitation 
of  the  poorest  and  neediest,  whose  insurance 
costs  them  two  or  three  times  as  much  as 
the  prosperous  man  pays  for  the  same  insur- 
ance.' The  enormous  expense  of  management 
of  an  industrial  insurance  company,  with  its 
army  of  solicitors  and  collectors,  is  undoubted- 
ly an  inseparable  incident,  and  that  fact  alone 
indicates  that  there  is  something  essentially 
wrong  with  the  system.  But  the  victim  of  such 
insurance  does  not  stop  with  contributing  to 
the  necessary  expenses,  enormous  as  they 
may  be.  A  Royal  Commission  appointed  to 
investigate  friendly  societies  in  Great  Britain 
reported  that  among  the  collecting  societies 

•  John  F.  Dryden,  The  Social  Economy  of  Industrial  Insurance. 

'  I.  M.  Rubinow,  in  Journal  of  Political  Economy,  xii,  380. 

'  See,  also,  "Q.  P."  How  to  Buy  Life  Insurance,  p.  71,  and  ly.  D. 
Brandeis,  Address  before  Twentieth  Century  Club,  Boston,  October, 
1906. 


124  STATE  INSURANCE 

—  whose  machinery  and  methods  most  nearly 
resemble  those  of  industrial  insurance  com- 
panies —  it  found  a  tendency  on  the  part  of 
the  managers  to  forget  that  they  were  simply 
trustees  and  to  look  upon  the  concern  as  their 
own  personal  property.  So  in  this  country  the 
insured  finds  himself  not  only  paying  legiti- 
mate expenses,  but  contributing  to  enormous 
dividends  to  stockholders  and  apparently  to 
dividends  to  more  highly  favored  insurers  in 
the  same  company.  A  flagrant  instance  of 
such  dividends  to  stockholders  has  often  been 
cited,  where  upon  an  original  investment  of 
$1000  there  is  an  annual  return  of  $2200.* 
The  percentage  of  withdrawals  from  such 
companies  —  often  exceeding  ninety  per  cent 

—  is  of  great  significance.  The  apologists 
for  such  insurance  flippantly  tell  us  that  it  is 
only  the  thriftless  that  withdraw,  seeming  to 
forget  that  it  is  not  intended  for  well-to-do 
and  prosperous  people.  But  it  certainly  is 
not  evidence  of  thrift  that  men  should  pay  for 
anything  two  or  three  times  what  it  is  worth, 
and  an  analysis  of  withdrawals  would  prob- 
ably disclose  the  fact  that  a  large  portion  of 
them  come  from  those  who  have  been  over- 
persuaded  to  attempt  to  carry  a  burden  en- 
tirely out  of  proportion  to  the  benefit  which 

'  Massachusetts  Insurance  Commissioner,  Forty-Eighth  AnmuU 
Report,  p.  xxviii. 


EXISTING   INSTITUTIONS  125 

can  result.  It  is  not  the  most  thrifty  and  sa- 
gacious man  "who  earneth  wages  to  put  into 
a  bag  with  holes."  ^ 

The  idea  involved  in  assessment  insurance 
has  been  at  the  basis  of  the  oldest  insurance 
known,  and  superficially  considered  it  might 
be  deemed  essentially  the  best  of  all.  It  has 
come  to  be  associated  largely  with  fraternal 
organizations  and  secret  societies.  While 
theoretically  sound  in  principle,  such  insti- 
tutions are  never  likely  to  prove  stable  unless 
there  is  some  other  bond  than  the  mere  busi- 
ness relation  of  members.  The  most  obvious 
difficulty  in  the  w^ay  of  their  stability  is  the 
fact  that,  if  their  rates  are  adjusted  scientific- 
ally and  upon  established  bases  of  mortality, 
the  member  finds  himself,  with  advancing 
years  and  diminishing  earning  capacity,  liable 
to  an  assessment  two,  three,  and  four  times 
as  large  as  that  with  which  he  began. 

There  remain  to  be  considered  the  old-line 
insurance  companies,  so  called.  These  are  of 
comparatively  recent  origin,  having  grown 
up  within  the  past  seventy-five  years.  Their 
remarkable  growth  and  development  are  of 
great  social  and  financial  significance.  So  far 
as  they  have  been  conducted  intelligently  and 
with  due  regard  to  the  interests  of  the  insured, 
they  have  rendered  a  service  of  incalculable 

•  Ilaggai,  i,  6. 


126  STATE  INSURANCE 

value,  and  their  beneficence  has  been  gener- 
ally recognized.  But  in  the  very  nature  of  the 
case  life  insurance  offers  great  temptations  to 
unscrupulous  managers,  attractive  oppor- 
tunities for  perverting  a  sacred  trusteeship  to 
serve  selfish  and  personal  ends.  That  the  in- 
herent tendency  has  been  in  some  degree  neu- 
tralized has  been  largely  due  to  the  efforts  of 
one  man  and  to  the  legislation  resulting  from 
his  advocacy.  How  strenuously  and  per- 
sistently Elizur  Wright  labored  in  the  interest 
of  honest  life  insurance  has  been  graphically 
related.^ 

But  in  spite  of  the  vigilance  of  such  men, 
and  of  stringent  legislation,  there  has  been 
gross  mismanagement  and  on  a  colossal  scale. 
The  revelation  of  the  corruption  and  reckless- 
ness which  has  attended  the  management  of 
some  of  the  largest  companies  is  too  recent 
and  too  well  known  to  require  repetition. 
The  story  of  greed,  fraud,  and  betrayal  of  trust 
is  appalling.  Such  evils  spread  with  so  deadly 
and  so  rapid  a  contagion  that  if  the  revelation 
had  been  long  postponed  it  may  well  be  sur- 
mised that  the  whole  system  of  life  insurance 
would  have  been  wrecked ;  at  least,  the  pub- 
lic confidence,  which  is  absolutely  essential, 
already  seriously  impaired,  would  have  been 
destroyed.  It  would  be  well  to  remember  that 

*  B.  J.  Hendricks,  in  McClure'a,  xxvii,  157. 


EXISTING  INSTITUTIONS  127 

the  investigations  disclosed  not  merely  a  dis- 
ease but  a  definite  tendency  towards  disease. 
The  course  of  the  disease  is  arrested  for  the 
moment,  but  its  reappearance  only  awaits  an- 
other condition  of  public  apathy,  the  too  rapid 
subsidence  of  a  righteous  public  indignation, 
and  the  relaxation  of  effective  vigilance. 

These  recent  investigations  reveal  certain 
insidious  evils  and  tendencies  which  are  in- 
herent in  the  system  of  life  insurance  as  now 
conducted.  The  lack  of  accountability  in 
managing  immense  trust  funds  is  not  con- 
ducive to  a  high  degree  of  fidelity  on  the  part 
of  managers,  and  the  fact  that  the  statistical 
features  of  the  business  are  not  easily  com- 
prehended without  some  actuarial  training 
renders  the  policy-holder — as  compared  with 
a  savings-bank  depositor,  for  example — quite 
powerless  to  call  his  company  to  account. 

But  aside  from  these  more  subtle  and  in- 
sidious dangers  to  which  life  insurance  in  its 
present  form  is  necessarily  subject,  there  are 
certain  obvious  defects  and  limitations  which 
make  it  far  from  an  ideal  institution.  Success 
and  stability  must  depend,  more  than  in  any 
other  business,  largely  upon  the  capacity  and 
fidelity  of  its  managers.  We  have  to-day  in 
this  country  forty  companies  more  or  less 
prominently  before  the  public;  we  have  per- 
haps twenty  that  can   be  quite  unreservedly 


128  STATE  INSURANCE 

commended.  But  we  do  not  realize  that  these 
companies  are  the  residue  of  a  great  host  that 
have  come  and  gone,  the  survivals  only  a 
small  fraction  of  the  total.  Therefore  we 
cannot  maintain  very  confidently  that  a  life 
insurance  company  is  inherently  a  stable  in- 
stitution. 

The  question  of  economy  must  also  be  met, 
the  inevitable  comparison  of  cost  with  result. 
Does  life  insurance  cost  too  much?  Is  there 
something  radically  defective  in  the  mechan- 
ism of  its  management  which  necessarily 
leads  to  extravagance  or  waste  ?  In  industrial 
affairs  we  estimate  carefully  the  cost  and  ef- 
ficiency of  expensive  machinery.  Is  there  not 
the  same  necessity  in  life  insurance  ?  A  gen- 
eration ago  Elizur  Wright  declared  that  the 
cost  of  solicitation  and  the  general  expenses 
of  life  insurance  made  it  practically  prohibit- 
ive for  those  most  needing  it ;  that  they  "  could 
not  afford  the  luxury  of  the  agency  expenses 
of  existing  systems."  But  he  placed  the  cost  of 
solicitation  at  only  from  six  to  ten  per  cent 
of  all  the  premiums,  and  the  expenses  of  man- 
agement at  seventeen  per  cent  of  the  entire 
premiums  for  the  year.^  Since  that  time  the 
cost  of  solicitation  has  greatly  increased,  and 
the  expenses  have  risen  from   seventeen  to 

*  Report  of  Com.  of  Boston  Board  of  Trade,  1874,  pp.  4  and  20; 
Circular,  1876,  calling  for  subscriptions  for  American  Family  Bank. 


EXISTING  INSTITUTIONS  129 

twenty-five  per  cent.*  The  commissions  of 
agents  for  the  year  1904  in  twenty-five  leading 
companies  exceeded  the  amount  of  new  pre- 
miums.^ In  the  thirty-three  companies  given 
in  the  Massachusetts  report  this  item  made  an 
aggregate  of  about  $80,000,000,  more  than  one 
fifth  of  the  entire  disbursements  of  the  year,  in- 
cluding payments  to  policy-holders ;  and  with 
other  expenses,  not  including  taxes,  making 
more  than  one  third  of  such  disbursements.' 

No  one  would  maintain  that  this  service, 
costing  the  policy-holders  of  this  country  for 
the  year  1904  $114,000,000,  is  productive 
labor  of  a  high  degree  of  efficiency;  there  is 
somehow  waste  or  extravagance,  or  both,  of 
appalling  magnitude. 

The  policy-holder  not  only  pays  for  the 
services  of  the  agent  who  effects  the  insurance 
upon  his  life ;  he  pays  for  time  wasted  by  other 
agents  upon  him,  even  for  time  wasted  by 
agents  upon  the  much  solicited  individual 
who  never  insures.  In  other  words,  there 
is  most  wasteful  reduplication  of  effort.  He 
pays,  too,  something  towards  princely  salaries, 
offices  extravagantly  equipped  and  expensively 

*  B.  F.  Brown,  Book  of  Life  Insurance  Economics,  Table  IV. 
The  figures  of  1904  are  taken  as  perhaps  indicating  average  and 
normal  conditions  rather  than  those  since  the  New  York  insurance 
investigations. 

'  Compare  Brown,  op.  cit.  Table  III,  with  Fiftieth  Report  of  Mass- 
achusetts Insurance  Commissiimer,  Table  C. 

'  Report  of  Massachusetts  Insurance  Commissioner,  1904,  Table  C. 


130  STATE  INSURANCE 

managed ;  he  contributes  to  funds  for  the  un- 
lawful enrichment  of  individuals,  for  corrupt- 
ing legislatures,  and  for  influencing  political 
campaigns. 

From  the  social  point  of  view  there  is  an- 
other aspect  of  the  subject  which  must  be 
considered:  the  probable  persistence  of  the 
policy-holder.  The  figures  bearing  upon  this 
point  are  very  significant.  In  the  thirty-three 
companies  referred  to,  of  the  policies  ter- 
minated during  the  year  1904  about  forty- 
two  per  cent  terminated  by  lapse  and  sur- 
render, over  thirty  per  cent  by  lapse.  The 
showing  of  industrial  companies  is  very  much 
worse ;  in  seven  companies  given  in  the  Massa- 
chusetts report  almost  nineteen  twentieths 
terminated  by  lapse  and  surrender,  over  nine 
tenths  by  lapse.  To  state  the  matter  more 
graphically,  while  in  these  industrial  com- 
panies $24,000,000  terminated  by  death, 
$19,000,000  terminated  by  surrender,  and 
$390,000,000  by  lapse  !^  Yet  from  such  figures 
as  these  does  the  president  of  one  of  these 
companies  doing  the  largest  business  in  that 
line  find  evidence  of  thrift  and  social  economy ! 

There  has  been  much  discussion  recently 
of  savings-bank  and  over-the-counter  insur- 
ance.  It  is  too  early  to  measure  the  effects  of 

^  Fiftieth  Anmicd  Report  of  Massachwetts  In»urance  Commis- 
sioner, Tables  D  and  F. 


EXISTING  INSTITUTIONS  131 

the  discussion  or  the  resulting  legislation. 
Movements  in  this  direction  are  significant 
as  furnishing  evidence  of  an  awakening  to  an 
urgent  social  need  and  a  recognition  of  the 
wastefulness  and  inadequacy  of  existing  in- 
stitutions. The  agitation  is  not  new.  The 
great  apostle  of  life  insurance  in  the  interests 
of  the  policy-holder,  Elizur  Wright,  advo- 
cated a  scheme  aiming  to  combine  in  one  in- 
stitution the  functions  of  life  insurance  and 
savings  banks,  under  which  the  expense  of 
solicitation  was  to  be  entirely  eliminated, 
and  he  secured  the  requisite  permissive  legis- 
lation in  a  charter  for  the  American  Family 
Bank.^  Although  the  evils  which  he  clearly 
recognized  have  greatly  increased  and  have 
fully  justified  his  apprehensions,  it  is  doubt- 
ful whether  others  will  succeed,  in  a  reform  of 
this  nature,  where  he  failed. 

In  surveying  the  whole  field,  then,  in  con- 
sidering the  nature  of  insurance,  the  urgent 
social  need,  especially  on  the  part  of  those 
who  rely  upon  their  daily  earnings  to  supply 
their  daily  wants,  of  making  provision  for  the 
vicissitudes  of  life,  —  such  provision  as  will 
bring  to  them  some  greater  degree  of  content- 
ment and  some  sense  of  security  for  to-morrow 
as  well  as  for  to-day,  — we  find  a  heterogeneous 
group  of  agencies  seeking  to  accomplish  the 

»  Massachusetts  Laws,  1876,  ch.  142,  and  1877,  ch.  152. 


132  STATE  INSURANCE 

end  desired.  By  their  aims  they  point  unerr- 
ingly to  a  universal  social  necessity  —  to  the 
fact  that  the  individual  can  accomplish, 
through  some  form  of  insurance,  what  he 
cannot  accomplish  alone.  In  this  field  at  least 
we  admit  the  advantage  of  collective  over 
individual  effort. 

But  while  existing  institutions  furnish  con- 
clusive evidence  of  the  need,  a  study  of  them 
discloses  the  fact  that  no  one  of  them  nor  all  of 
them  combined  are  adequate  or  even  appro- 
priate for  the  satisfaction  of  the  need.  While 
some  of  them  might,  by  slight  modifications, 
furnish  the  various  kinds  of  insurance  that 
have  been  referred  to,  —  insurance  against 
accident,  death,  sickness,  old  age,  and  invalid- 
ity, —  they  can  do  so  only  through  methods 
which  are  costly,  wasteful,  and  unscientific. 
They  have  to  some  extent  stimulated  thrift, 
especially  among  the  thrifty;  to  some  extent 
they  have  discouraged  thrift,  especially  among 
the  thriftless ;  at  least,  for  the  past  fifty  years, 
through  their  advocates  and  their  armies  of 
solicitors,  they  have  done  much  towards  edu- 
cating the  public  upon  the  subject  of  insurance, 
so  that  there  are  few  to-day  in  intelligent  com- 
munities who  do  not  admit  its  usefulness  and 
beneficence  when  properly  administered.  It 
is  patent  to  all  observers  that  it  must  furnish 
in  the  future  in  increasing  degree  a  bulwark 


EXISTING  INSTITUTIONS  133 

against  that  poverty  which  comes  upon  the 
propertyless  through  accidents,  sickness,  or 
other  sudden  misfortune ;  that  it  must  in  some 
way  be  made  to  reach  those  who  do  not  make 
other  provision  for  the  future  and  its  vicissi- 
tudes. 

We  must  not  be  misled  or  dazzled  by  the 
stupendous  figures  which  show  the  totals  of 
insurance  carried,  cited  often  as  conclusive 
evidence  of  a  nation's  prosperity.  These 
figures  are  much  swollen  by  the  insurance  of 
well-to-do  people  who  least  need  it  and  in 
many  cases  would  better  be  without  it;  they 
furnish  no  indication  of  an  increasing  thrift 
or  prosperity  among  the  poor  and  the  needy. 
Besides,  such  vast  sums  suggest  perils  as  well 
as  benefits ;  their  possession  and  control  seem 
to  lead,  as  shown  by  recent  investigations, 
irresistibly  towards  greed,  recklessness,  cor- 
ruption, and  general  maladministration.  It 
is  not  pessimistic  to  suggest,  in  the  light  of 
recent  events,  that  at  the  rate  of  increase 
of  the  past  fifty  years  the  directors  —  by  no 
means  the  policy-holders  —  of  a  few  great 
insurance  companies  might  at  no  distant  date 
control  and  dictate  the  financial  policies  of 
the  nation,  —  a  power  too  great  to  be  intrusted 
to  any  private  organizations. 

The  enlightened  state  is  to-day  ready  for 
something  better  than  existing  institutions. 


134  STATE  INSURANCE 

A  great  nation  has  furnished  a  brilliant  ex- 
ample for  our  study  and  guidance.  Under  the 
inspiration  of  that  example  the  world  seems 
to  be  moving  toward  the  solution  of  one  of  its 
greatest  and  most  difficult  problems. 


VII 

INCIDENCE 

Under  a  system  of  compulsory  insurance  for 
workmen  such  as  prevails  in  Germany  and 
some  other  countries,  upon  whom  does  the 
burden  fall  ?  Upon  whom  ought  it  to  fall  as  a 
matter  of  justice  ?  The  German  law  provides 
that  it  shall  be  distributed ;  in  sickness  insur- 
ance one  third  must  be  paid  by  the  employer 
and  two  thirds  by  the  workman;  in  accident 
insurance  the  whole  must  be  paid  by  the  em- 
ployer; and  in  invalidity  insurance  a  sub- 
sidy is  paid  by  the  state  and  the  balance  in 
equal  shares  by  the  employers  and  the  work- 
men. Perhaps  it  would  not  be  claimed  that 
this  distribution  of  the  burden  was  strictly 
scientific;  there  was  the  necessity  for  com- 
promise between  diverse  views;  in  accident 
insurance  it  was  doubtless  felt  that  the  em- 
ployer was  in  a  position  to  charge  the  cost  to 
the  industry  and  recover  it  in  a  higher  price 
to  consumers,  although  this  reasoning  might 
be  almost  equally  applicable  to  other  kinds 
of  insurance,  even  if  not  quite  so  obviously 
sound. 

In  the  discussion  of  the  question  of  the  in- 
cidence of  burdens  there  is  often  much  con- 


136  STATE  INSURANCE 

fusion  of  thought.  Who  pays  taxes,  direct  and 
indirect  ?  It  is  usually  assumed  that  the  ques- 
tion is  very  simple :  that  the  landlord  pays  the 
tax  and  not  the  tenant ;  the  employer  and  not 
the  employee;  in  a  word,  the  one  who  me- 
chanically turns  the  fund  over  to  the  public 
treasury.  Nothing  could  be  simpler  in  the 
way  of  a  solution.  For  example,  in  a  recent 
public  document  issued  for  the  purpose  of 
furnishing  valuable  information  one  may  find 
it  carefully  computed  that  the  proper  tax  of 
a  family  of  eight  in  a  certain  city  would  be 
$645.44  per  annum,  while  the  head  of  the 
family  pays  only  a  poll-tax  of  two  dollars.  The 
writer  naively  asks,  "How,  on  the  supposed  in- 
come of  $600,  can  enough  be  charged  against 
him  to  pay  a  tax  of  $645.44 .?"  He  adds 
that  such  a  person  "  is,  in  reality,  a  pensioner 
and  a  recipient  of  benefits  paid  for  by  persons 
who  are  taxed."  This  would  seem  to  be  the 
echo  of  an  old  political  economist :  "The  poor 
do  not,  never  have,  and  never  can  pay  any 
tax  whatever.  A  man  that  has  nothing  can 
pay  nothing."  *  The  farm  laborer  sometimes 
in  the  dull  season  works  for  a  nominal  wage, 
say  five  dollars  per  month  and  board.  It  might 
be  argued  that  as  his  board  is  worth  at  least 
fifteen  dollars  a  month  he  is  a  pensioner,  as 

'  F.  F,  Fauquier,  quoted  in  Seligman,  Incidence  of  Taxation,  p. 
17. 


INCIDENCE  137 

he  cannot  pay  the  value  of  his  board  out  of  his 
wages. 

As  a  matter  of  fact,  it  is  immaterial  who 
manually  pays  a  tax.  We  can  imagine  a  com- 
munity where  it  would  be  the  custom  for  the 
tenant  to  pay  it  rather  than  the  landlord ;  the 
workman  rather  than  the  employer.  Taxes 
are  not  paid,  as  a  gratuity,  out  of  some  mys- 
terious fund.  They  must  trace  their  ultimate 
source  to  the  product  of  labor.  The  question 
would  be  simplified  if  we  look  upon  wages, 
when  equitably  adjusted,  as  a  residue,  after 
the  payment  of  rent,  taxes,  interest,  and 
similar  charges  have  been  deducted. 

Some  such  general  considerations  should 
be  borne  in  mind  when  we  discuss  the  in- 
cidence of  charges  for  workmen's  insurance. 
The  burden  does  not  necessarily  by  any  means 
fall  upon  the  one  who  actually  makes  the  pay- 
ment. 

There  are  three  parties  upon  whom  the 
cost  of  such  insurance  may  be  levied:  the 
state,  the  employer,  and  the  workman.  It  is 
sometimes  loosely  argued  that  upon  which- 
ever of  these  parties  the  assessment  falls  it 
virtually  comes  to  the  same  thing  —  a  tax 
upon  the  consumer.  This  view  is  superficial 
and  fallacious,  as  will  be  shown. 

At  first  sight  it  might  seem  appropriate  that 
the  state  should  take  upon  itself  the  whole 


138  STATE  INSURANCE 

burden,  granting  compensation  in  case  of  acci- 
dents, sickness,  and  invalidity  alike.  It  would 
be  a  natural  transition  from  the  support  of  the 
so-called  worthy  poor  as  now  administered  to 
the  payment  of  specific  amounts  to  the  unfor- 
tunate soldiers  of  industry.  The  tax  would  be 
levied  upon  society  as  it  is  to-day.  The  objec- 
tions are  economic  as  well  as  moral  and  senti- 
mental :  there  would  be  the  same  tendency  to 
pauperize  men  as  there  is  under  the  present 
poor-law ;  the  state  would  be  held  out  as  a  great 
benefactor  of  inexhaustible  resources;  there 
would  be  the  greatest  inducement  to  simula- 
tion of  sickness  and  incapacity ;  it  would  bring 
in  the  evils  of  the  soup-kitchen  on  a  large 
scale.  For  these  reasons  the  cost  would  be 
excessive  and  the  evils  would  be  cumulative. 
By  this  method,  too,  the  nature  and  the 
amount  of  the  burden  would  be  effectively 
disguised;  the  real  cost  of  an  industry  could 
not  be  identified  or  made  known;  the  party 
reaping  the  profit  of  the  industry  might  escape 
its  losses ;  the  state  would  say  to  conscienceless 
promoters  of  industry,  if  there  are  such,  Be  as 
reckless  as  you  may  with  the  human  material 
committed  to  your  charge,  maim  with  your 
dangerous  machinery,  poison  with  noxious 
gases  and  unsanitary  surroundings,  incapac- 
itate as  you  may,  even  assail  the  future  of 
the  race  by  pitiless  disregard  of  maternity  and 


INCIDENCE  139 

childhood,  —  it  shall  cost  you  nothing  except 
as  you  contribute  to  taxes  largely  paid  by 
others;  swell  your  profits  and  dividends,  un- 
mindful of  the  fact  that  a  considerable  per- 
centage of  your  so-called  earnings  are  virtu- 
ally disguised  in  poor-rates. 

But  perhaps  the  most  serious  objection  to 
the  state's  subsidy  is  ethical :  As  long  as  the 
state,  by  whatever  method,  carries  the  burden, 
it  will  inevitably  be  looked  upon  as  a  gratuity 
and  the  recipient  will  wear  a  badge  of  disgrace 
both  in  his  own  estimation  and  in  that  of  his 
fellows ;  however  stoutly  it  may  be  maintained 
that  he  is  not  a  pauper,  that  he  is  simply 
receiving  a  delayed  reward  for  his  labors,  we 
cannot  overcome  the  current  of  thought  that 
has  been  running  for  centuries. 

There  is  something  to  be  said  in  favor  of 
imposing  this  burden  upon  employers  or,  in 
other  words,  upon  industry.  It  may  then  still 
appear  in  the  higher  cost  of  goods  or  service. 
This  would  not  necessarily  mean  a  higher 
price  for  consumers,  as  is  usually  assumed. 
More  correctly  stated,  it  would  perhaps  result 
in  either  a  diminution  of  profits  or  a  higher 
price.  If  prices  are  already  as  high  as  the 
market  permits,  it  might  come  out  of  profits ; 
if  profits  are  already  as  low  as  possible,  con- 
sidering the  future  maintenance  of  the  indus- 
try, there  would  arise  a  commercial  disad- 


140  STATE  INSURANCE 

vantage  in  the  competition  with  other  nations 
possibly.  Possibly  rather  than  probably,  be- 
cause it  is  not  to  be  assumed  that  nations  are 
not  to  be  rivals  in  social  legislation  that  bene- 
fits its  workmen  as  well  as  in  the  products  of 
their  manufactories.  We  should  expect  this 
rivalry  as  a  matter  of  theory,  but  we  find  that 
it  exists  as  a  matter  of  fact.  Germany's  social 
legislation  in  the  eighties  almost  instantly 
aroused  all  of  Europe,  and  there  were  irresist- 
ible demands  for  such  legislation  in  many 
other  countries. 

But  at  the  worst,  if  profits  are  at  a  minimum 
and  prices  are  at  a  maximum  which  cannot  be 
passed,  we  simply  have  a  demonstration  that 
that  particular  industry  is  unprofitable  —  in 
some  measure  parasitic.  As  between  the  em- 
ployer and  the  state  this  situation  furnishes  no 
reason  why  the  state  should  assume  the  bur- 
den of  insuring  the  workmen,  no  advantage  in 
disguising  the  facts.  If  the  industry  is  prose- 
cuted at  a  loss  the  state  might  as  well  pay  the 
loss,  when  ascertained,  in  a  direct  subsidy  as 
to  pay  it  indirectly.  There  would  be  great  ad- 
vantage in  knowing  just  how  far  the  industry 
was  a  burden  upon  other  industries ;  to  what 
extent  it  was  a  recipient  of  public  aid,  to  what 
extent  it  was  itself  a  pauper.  If  it  is,  tested 
by  essential  results,  a  pauper,  nothing  can  be 
more  odious  than  that  it  should  at  the  same 


INCIDENCE  141 

time  be  paying  large  dividends  from  fictitious 
earnings.  Essentially  that  industry  may  be 
deemed  a  pauper  which  exhausts  the  fifty 
years  of  a  workman's  industrial  life  in  twenty 
years  or  fifteen  or  ten,  as  has  not  infrequently 
been  the  case,  and  leaves  the  remnant,  the 
wreck,  to  the  care  of  society. 

Payment  of  insurance  charges  by  the  indi- 
vidual remains  to  be  considered.  Why  should 
not  the  workman  himself  pay  them  ?  Why 
should  he  not  care  for  his  future  and  provide 
for  its  emergencies  ?  Does  he  not  in  reality 
bear  this  burden,  whatever  the  method  em- 
ployed, since  the  charge  must  come  out  of 
the  product  of  labor  ?  Does  it  not  constitute 
a  portion  of  his  just  wages  ?  Assuming  that  a 
man's  support  for  his  whole  life,  for  the  pro- 
ductive portion  and  the  waste  alike,  is  to  come 
out  of  the  product  of  his  labor,  why  should  we 
distinguish  the  two  ?  Figures  indicate  that,  as 
an  average,  about  six  per  cent  of  a  man's  pro- 
ductive years  is  lost  through  sickness ;  *  he 
loses  a  less  definite  percentage,  varying  with 
the  kind  of  employment,  through  accidents; 
certain  amount  through  old  age  and  invalidity. 
The  amount  of  the  loss  from  these  sources  is 
determinable  by  actuarial  calculations.  Being 
determinable,  why  should  not  the  provident 
workman  anticipate  it;  why  should  not  the 

*  See  p.  5,  ante. 


142  STATE  INSURANCE 

improvident  workman  be  compelled  to  do 
so? 

Assuming  that,  for  the  vast  majority  of 
workmen,  the  present  rate  of  wages  is  only  suf- 
ficient to  meet  his  daily  needs  while  his  w  ork- 
ing  capacity  is  unimpaired,  —  an  assumption 
to  which  those  who  have  studied  the  question 
would  generally  assent,  —  to  require  them  to 
pay  insurance  charges  would  necessitate  an 
increase  in  the  rate  of  wages  or  a  further  lower- 
ing in  the  standard  of  living.  An  increase  in 
the  rate  of  wages  might  result  in  the  diminu- 
tion of  profits  or  in  a  higher  price  for  the  pro- 
duct or  the  service. 

Of  course  what  has  been  said  about  the  in- 
creased cost  of  product  or  service  necessitated 
by  insurance  charges  and  the  resulting  dis- 
advantage in  competition  would  not  apply  to 
public  service  corporations.  That  a  railroad, 
for  example,  should  pay,  either  in  higher 
wages  or  in  some  other  form,  the  cost  of  the 
human  material  which  it  uses,  is  a  proposition 
too  axiomatic  to  merit  discussion  to-day,  how- 
ever it  may  have  seemed  sixty  years  ago. 
Practically  this  fact  is  recognized  in  the  estab- 
lishment of  relief  departments  by  the  great 
railroad  corporations  of  this  country. 

We  must  consider,  too,  in  this  connection 
the  possibility  of  increased  efficiency  under  a 
system  of  compulsory  insurance  made  univers- 


INCIDENCE  143 

ally  operative.  At  first  sight  the  claim  or  sug- 
gestion that  eflSciency  could  be  so  increased 
might  seem  fanciful  and  visionary,  but  for- 
tunately the  demonstration  is  at  hand  in  the 
experience  of  Germany.  The  results  in  this 
respect  were  confidently  predicted  in  the  out- 
set by  those  who  looked  beneath  the  mere 
surface  of  economic  phenomena.  Their  hope- 
ful view  prevailed  over  the  predictions  of  dire 
commercial  and  industrial  disaster.  Their 
expectation  of  superior  efficiency  was  merely  a 
recognition  of  the  distinct  value  to  society  of 
the  conservation  of  industrial  energy;  of  the 
fact  that  sickness,  accidents,  incapacity  for 
labor,  so  far  as  they  are  preventable,  are  signs 
of  industrial  waste.  The  prudent  husbandman 
finds  it  profitable  to  keep  his  beast  of  burden 
in  working  condition  by  proper  housing,  feed- 
ing, and  care ;  society  cannot  afford  to  be  less 
prudent  in  its  care  for  the  workman.  To  pro- 
vide for  medical  and  surgical  aid,  for  hospi- 
tals and  sanatoria,  is  not  inconsistent  with  cold, 
calculating  thrift  so  long  as  they  contribute  to 
higher  efficiency.  Beyond  all  of  these  material 
considerations,  who  will  place  a  value  in 
terms  of  efficiency  upon  the  contentment  that 
must  come  with  a  wise  and  ample  provision 
for  the  future  ? 

A  common  fallacy  in  connection  with  the 
cost  and  incidence  of  insurance  charges  should 


144  STATE  INSURANCE 

be  noted :  It  is  said  that  if  these  charges,  how- 
ever the  incidence  may  be  adjusted,  result  in 
a  higher  cost  of  production,  it  will  react  upon 
the  workman  in  an  increased  cost  of  living. 
But  it  must  be  remembered  that  the  workman 
is  not  a  consumer  to  the  same  extent  that  he  is 
a  producer.  It  has  been  authoritatively  stated 
that  one  fourth  of  the  people  of  the  United 
States  consume  two  thirds  of  its  income  and 
that  of  the  other  three  fourths,  two  fifths  con- 
sume more  than  the  remaining  three  fifths ;  in 
other  words,  two  fifths  of  the  total  population, 
comprising  perhaps  the  majority  of  w^orkmen, 
do  not  consume  per  capita  more  than  one 
eighth  or  one  tenth  as  much  as  the  richer  one 
fourth.^  Obviously  the  workman  may  not  suf- 
fer as  much  from  an  increase  in  prices  as  he 
gains  by  the  higher  rate  of  wages  which  con- 
tributes to  higher  prices. 

The  claim  that  it  is  immaterial  where  the 
incidence  of  insurance  charges  falls  will  not 
bear  scrutiny.  Public  policy  in  all  such  mat- 
ters should  conform  to  economic  facts  and  not 
be  based  upon  fictions.  If  dependence,  in 
cases  of  industrial  misfortunes,  were  the  result 
of  intemperance  or  improvidence;  if  it  in- 
dicated that  wages,  ample  or  excessive,  had 
been  ruthlessly  squandered ;  if  this  dependence 
could  be  attributed  justly  to  the  fault  or  even 

'  C.  B.  Spahr,  Distribution  of  Wealth,  pp.  128,  129. 


mCIDENCE  145 

the  folly  of  the  victim ;  if  society  in  its  indus- 
trial adjustments  had  done  its  full  duty  by 
him,  —  possibly  there  might  be  righteous  and 
wholesome  discipline  and  warning  in  visiting 
upon  him  the  contempt  and  odium  which  the 
public  dependent  is  made  to  feel.  But  we  do 
not  believe  this  to  be  the  case  even  in  the  ma- 
jority of  instances.  Why,  then,  should  we  pre- 
serve in  industrial  bargaining,  in  the  forms  of 
law,  in  social  usages,  and  in  current  thought, 
these  absurd  fictions  ?  If  insurance  is  the 
rational  method  (and  no  other  has  yet  been 
devised)  by  which  the  workman  should  make 
provision  for  sickness,  accidents,  invalidity, 
and  old  age,  for  the  widow  and  the  orphan, 
—  in  other  words,  the  method  whereby  he 
may  assume  all  of  his  own  burdens,  — and 
if  the  protection  of  insurance  is  his  right  as 
well  as  his  duty,  why  should  not  he  himself 
pay  the  cost  ?  Why  should  not  his  wages  be 
made  sufficient,  if  not  already  suflScient,  to 
enable  him  to  meet  this  charge  ?  Why  should 
he  receive  as  a  suppliant  what  is  his  of  right  ? 
Why  should  he  accept  as  the  dole  of  conde- 
scending charity  a  portion  of  his  just  wages  ? 
Why  should  it  be  represented  to  him  by  con- 
stant iteration  that  society  or  his  employer  is 
paying  the  cost  of  his  insurance,  since  it  must 
ultimately  come  out  of  the  product  of  his 
own  toil  ? 


146  STATE  INSURANCE 

It  is  better  that  the  state  should  not  be 
looked  upon  as  a  bounteous  and  indiscrimin- 
ate giver;  that  the  employer  should  not  be 
exalted  above  his  employee  on  account  of  sup- 
posed benefactions  which  are  merely  appar- 
ent; that  there  should  be  cultivated  in  the 
workman  a  sense  of  dignity  rather  than  of 
servility;  of  manliness,  self-reliance,  and  thrift 
rather  than  of  dependence. 

No  statistician  can  now  tell  us,  approx- 
imately even,  what  it  costs  to  care  for  the 
wrecks  of  industry,  the  maimed,  the  sick,  the 
infirm,  the  aged,  the  widow,  and  the  orphan ; 
nor  can  any  one  have  a  definite  conception  as 
to  the  incidence  of  the  burden.  But  the  cost  of 
insuring  against  the  vicissitudes  of  life  can  be 
actuarially  determined  and  with  increasing 
precision  as  data  accumulate  under  a  scientific 
system.  As  to  a  given  industry  we  may  know, 
with  some  approach  to  accuracy,  what  that 
industry  costs  in  addition  to  the  labor  cost  as 
now  understood,  in  accidents,  in  sickness,  in 
shortening  the  industrial  life  of  men  or  im- 
pairing their  capacity  for  work. 

If  it  is  true  to-day  that  a  large  percentage 
of  workmen  are  receiving  a  bare  living  wage 
based  upon  the  working  days  and  years  of  life, 
this  actuarial  determination  of  the  cost  of 
insurance  would  disclose  just  how  much  they 
lack  of  a  real  living  wage ;  it  would  reveal,  as 


INCIDENCE  147 

thoufijh  by  a  chemical  or  other  scientific  test, 
a  radical  defect  in  the  present  basis  of  wages. 

Our  conclusion,  then,  is  that  the  cost  of 
workmen's  insurance  should  fall  upon  work- 
men and  should  distinctly  come  out  of  their 
wages;  that  such  an  arrangement  would 
accord  with  essential  facts,  and  that  there 
could  be  no  gain  through  any  disguise  or  indi- 
rection ;  that  it  would  necessarily  lead  to  a  re- 
adjustment of  w^ages  wherever  inadequate  to 
conform  to  the  requirements  of  a  real  living 
wage,  a  living  wage  based  upon  the  whole  life 
and  not  upon  a  fraction,  to  include  the  waste 
as  well  as  the  productive  portion. 

While  any  rational  system  of  workmen's 
insurance  ought  to  bring  courage,  hope,  and 
contentment  to  the  wage-earner,  the  payment 
of  the  cost  out  of  his  own  wages,  the  realiza- 
tion that  it  is  his  own  provision  for  his  own 
future  would  surely  inspire  him  with  a  higher 
spirit  of  manliness,  of  thrift,  and  of  self-reli- 
ance. 


VIII 

OLD-AGE  PENSIONS 

There  is  said  to  prevail  among  certain  bar- 
barous tribes  a  simple  but  summary  method 
of  dealing  with  the  aged  poor:  A  council  is 
called,  and  if  the  person  under  consideration 
is  found  to  have  reached  a  certain  stage  of  de- 
crepitude and  dependence  a  feast  is  held  in  his 
honor,  he  bids  his  friends  a  last  farewell  and 
submits  to  the  penalty  of  death.  The  victim 
cheerfully  acquiesces  in  the  decision  that  he 
ought  not  longer  to  incumber  the  earth.  This 
would  seem  to  be  a  very  humane  custom  com- 
pared with  that  of  most  civilized  nations, 
where  the  aged  pauper,  physically  exhausted, 
destitute,  friendless,  forsaken,  drags  out  a 
miserable  existence  in  the  workhouse  or  as  the 
recipient  of  some  humiliating  form  of  poor- 
relief.  The  pathos  of  the  situation  is  height- 
ened when  it  happens  that  the  unfortunate  one 
is  a  veritable  soldier  of  toil,  worn  out  on  in- 
dustrial battlefields,  perhaps  after  fifty  years 
of  ill-requited  labor.  His  misery  is  sometimes 
emphasized  by  his  conviction  that  an  unde- 
fined portion  of  the  material  prosperity  that 
surrounds  him  is  rightfully  his ;  that  the  com- 
munity in  which  he  lives  and  perhaps  the  fel- 


OLD-AGE  PENSIONS  149 

low  citizen  who  looks  upon  him  with  mingled 
aversion  and  pity  have  unduly  profited  by  his 
toil. 

There  has  always  been  a  theory,  persistent 
and  widely  prevalent,  that  the  aged  pauper 
has  reached  his  condition  through  his  own 
fault,  through  intemperance  or  some  kindred 
vice,  or  at  least  through  thriftlessness  or  ex- 
travagance. Not  infrequently  the  self-compla- 
cent citizen  who  has  profited  possibly  by  the 
very  industrial  conditions  which  contribute  to 
pauperism  seems  to  discern  in  its  evils  signs  of 
a  wholesome  retributive  justice. 

But  there  is  a  growing  tendency  to  discrim- 
inate; statistics  have  been  patiently  gathered 
and  marshaled  and  they  tend  to  show  that  a 
very  large  percentage  of  old-age  pauperism 
arises  from  misfortune  rather  than  fault.  It  is 
idle  to  talk  of  thrift  and  saving  without  regard 
to  the  adequacy  of  wages.  In  the  debate  upon 
the  old-age  pension  act  in  New  Zealand  one  of 
the  speakers  indignantly  exclaimed:  "Thrift 
out  of  four  shillings  a  day !  with  perhaps  eight 
or  nine  mouths  to  feed,  clothes  to  find,  boots  for 
their  feet  and  books  for  their  school ! "  *  But  a 
majority  of  the  wage-earners  of  Great  Britain 
do  not  get  more  than  four  shillings  a  day,  and 
for  a  large  class  in  the  United  States  conditions 
are  no  better.  The  grotesqueness  of  the  claim 

'  H.  D.  Lloyd,  Newest  England,  p.  54S. 


150  STATE  INSURANCE 

that  such  men  ought  to  save  against  old  age  is 
coming  to  be  realized.  In  the  more  recent  dis- 
cussions of  old-age  relief  we  hear  more  of  doing 
justice  and  less  of  bestowing  charity.  The 
preamble  to  the  old-age  pension  act  in  New 
Zealand  recites  that  it  is  equitable  that  those 
who,  in  the  prime  of  life,  helped  to  bear  the 
public  burdens  of  the  Colony  and  to  open  up 
its  resources  should  receive  pensions,  and  in 
the  debate  in  the  British  Parliament  upon  the 
recent  old-age  pension  act,  the  Chancellor  of 
the  Exchequer  said,  in  reply  to  the  demand  for 
a  contributory  plan :  "The  workman  who  has 
contributed  health,  strength,  vigor,  and  skill  to 
the  building-up  of  the  wealth  of  the  nation  has 
made  his  contribution."  * 

At  least  we  are  learning  to  make  distinc- 
tions, and  we  speak  of  the  deserving  poor. 
The  deserving  poor !  Why  deserving  ?  and  of 
what.?  and  from  whom? 

The  question  of  civil  pensions  seems  to  take 
its  earlier  and  more  definite  form  as  related  to 
public  servants.  It  is  singular,  if  we  reflect, 
that  the  public  servant  —  the  envy  of  his  fel- 
lows, who  eagerly  secures  a  position  where  his 
services  are  usually  less  onerous  and  better  paid 
than  similar  service  under  a  private  employer, 
who  is  practically  guaranteed  employment  for 
a  long  period  of  service  and  without  deduc- 

»  London  Times,  June  16,  1908,  p.  5. 


OLD-AGE  PENSIONS  151 

tions  for  enforced  idleness,  and  who  is  fre- 
quently retained  at  a  time  of  life  when  he 
would  be  replaced  by  a  new  recruit  in  private 
employment  —  that  this  highly  favored  indi- 
vidual should  be  the  peculiar  object  of  the 
philanthropist's  regard.  The  public  employee, 
school-teacher,  clerk,  bookkeeper,  stenograph- 
er, whatever  he  may  be,  has  far  stronger  in- 
ducements towards  thrift  and  far  less  excuse 
for  improvidence  than  the  wage-earner  in  a 
similar  class  who  cannot  know  what  his  earn- 
ings may  be  or  what  deductions  must  be  made 
for  unemployment.  When  the  comparison  is 
made  with  the  lower  classes  of  wage-earners  it 
becomes  still  more  significant. 

The  sentiment  in  favor  of  pensions  to  pub- 
lic servants,  if  analyzed,  justifies  itself  on  the 
assumption  that  they  have  been  insufficiently 
rewarded,  that  something  has  been  withheld 
which  belonged  to  them,  and  that  the  state  or 
municipality  should  make  amends ;  or,  if  there 
is  to  be  a  contributory  scheme,  the  state,  dis- 
trusting the  thrift  and  providence  of  its  em- 
ployees, constitutes  itself  a  guardian  to  make 
provision  for  the  future.  But  if  there  is  any 
such  reasonable  presumption  of  inadequate 
compensation  in  favor  of  the  public  servant, 
how  would  the  case  stand  as  to  the  ordinary 
wage-earner  w^ho  gets  less  for  a  similar  serv- 
ice. Has  the  state  a  lower  degree  of  respons- 


152  STATE  INSURANCE 

ibility  for  an  industrial  system  which  results 
in  inadequate  wages  than  for  withholding  such 
wages  from  its  public  servants  ?  Should  the 
public  show  less  solicitude  for  the  great  mass 
of  wage-earners,  upon  whom  its  prosperity 
fundamentally  depends,  than  for  a  small  num- 
ber of  its  immediate  employees  ?  If  it  owes  a 
residue  of  obligation  to  the  latter  in  old  age, 
does  it  not  a  fortiori  owe  it  to  the  former  ?  If 
it  may  fittingly  take  the  latter  under  guardian- 
ship in  a  contributory  plan,  should  it  not  a 
fortiori  the  former? 

The  discussion  of  the  subject  of  relief  for  the 
aged  poor  in  its  strictly  economic  and  scienti- 
fic aspects  is  recent,  although  their  condition 
has  always  excited  attention  and  sympathy 
wherever  observed  among  civilized  people. 
But  the  idea  that  they  had  a  right  to  relief 
has  not  as  a  rule  entered  men's  minds,  or,  if 
suggested,  has  been  stoutly  denied.  If  they 
applied  for  aid  it  must  be  in  the  attitude  of 
suppliants  seeking  charity;  any  suggestion 
that  there  had  been  wrongs  or  injustice  which 
should  be  righted  would  have  been  resented. 

A  brief  sketch  of  the  subject  historically 
considered  may  not  be  out  of  place/ 

The  government  projects  in  England  nearly 

*  See  J.  F.  Wilkinson,  Pensions  and  Pauperism,  pp.  7-33;  also  as 
to  plans  in  Great  Britain,  H.  H.  Asquith,  Speech  on  the  Budget, 
London  Times,  May  8,  1908,  p.  11. 


OLD-AGE  PENSIONS  153 

two  hundred  years  ago,  and  in  Holland  much 
earlier,  to  provide  for  deferred  annuities  have 
no  relation  to  the  present  discussion,  as  the 
purpose  was  fiscal  rather  than  economic  —  to 
meet  the  urgent  need  of  the  government  for 
funds  and  not  the  future  needs  of  pensioners. 
But  as  early  as  1773  a  plan  for  old-age  pen- 
sions was  advocated  by  Edmund  Burke  and 
passed  the  House  of  Commons ;  a  little  later, 
in  1793,  a  scheme  was  devised  by  Thomas 
Paine  which  he  hoped  might  become  interna- 
tional in  its  scope.  The  agitation  in  Germany 
in  the  seventies  may  be  looked  upon  as  the 
immediate  stimulus  to  the  more  recent  discus- 
sion. In  Germany  the  provision  for  superan- 
nuation became  a  part  of  the  great  system  of 
compulsory  insurance  for  workmen.  In  Eng- 
land the  scheme  of  Canon  Blackley,  doubtless 
suggested  by  the  movement  already  taking 
shape  in  Germany,  and  his  earnest  advocacy 
of  it,  commanded  attention.^  His  plan  was 
urged  upon  the  House  of  Lords  by  the  Earl 
of  Carnarvon, 2  and  in  a  modified  form  was 
advocated  by  Chamberlain.^  Later  exhaust- 
ive inquiries  were  made  and  data  gathered 
by  parliamentary  committees  and  by  a  royal 
commission.* 

'  W.  L.  Blackley,  "  National  Insurance,"  in  Nineteenth  Century, 
iv,  834  (1878). 

2  Hansard,  1880,  cclii,  1180.        '  National  Review,  xviii,  7'21. 
*  For  a  summary  of  plans  proposed,  including  those  which  have 


154  STATE  INSURANCE 

Whatever  other  conclusions  may  have  been 
reached  during  the  past  twenty  years,  it  is 
generally  agreed  that  plans  for  old-age  relief 
which  are  purely  optional  fall  far  short  of 
reaching  the  evils  which  they  seek  to  alleviate. 
The  postal  savings  banks  of  Great  Britain  and 
the  caisse  des  retraites  in  France,  established 
as  early  as  1860,  have  proved  highly  useful  to 
the  more  thrifty  and  better-paid  workmen,  but 
the  problem  of  old-age  poverty  remains.  In 
order  to  make  the  securing  of  pensions  more 
attractive  to  the  less  thrifty  classes,  it  has  some- 
times been  thought  advisable  to  add  to  their 
contributions  something  in  the  nature  of  a 
government  subsidy.  This  was  one  of  the  fea- 
tures of  the  Blackley-Chamberlain  proposal. 
A  little  later,  in  1891,  a  measure  was  proposed 
in  France  by  Constans  and  Rouvier,  known  as 
the  projet  Constans,  under  which  the  workman 
was  to  pay  a  small  sum  daily,  w4iich  was  to  be 
duplicated  by  the  employer,  the  state  to  add 
two  thirds  as  much  as  the  total. 

It  is  interesting  to  note  in  the  discussions  of 
that  day  how  slowly  people  were  becoming 
reconciled  to  the  idea  of  any  plan  of  old-age 
pensions  which  was  not  entirely  optional.  To 
an  English  critic  of  the  time  the  various  plans 
proposed  seemed  to  be  those  of  "impulsive 

been  enacted  into  law,  see  F.  Parsons,  The  Story  of  New  Zealand, 
Appendix  HI,  pp.  796-798. 


OLD-AGE  PENSIONS  155 

philanthropists  and  empirical  faddists."  The 
projet  Constans  was  denounced  as  charlatan- 
esque/ 

There  have  always  been  radical  differences 
of  opinion  as  to  some  of  the  main  features  of 
old-age  pensions.  What  age  shall  be  fixed 
upon  for  the  commencement  of  old-age  relief  ? 
Shall  pensions  be  placed  upon  a  contributory 
basis,  and,  if  so,  shall  the  state  offer  a  subsidy 
as  an  inducement  to  contributions  ?  Shall 
contribution  be  compulsory  ?  If  pensions  are 
to  be  gratuitous,  shall  they  be  universal  or 
limited  according  to  need,  merit,  or  other 
test? 

The  question  has  been  studied  and  scrutin- 
ized from  every  point  of  view.  It  was  proposed 
by  Canon  Blackley  that  the  young  man,  at  the 
very  beginning  of  his  industrial  career,  should 
make  such  a  contribution  to  a  fund,  to  be  con- 
trolled by  the  government,  as  should  entitle 
him  to  relief  in  sickness  and  old  age,  the  latter 
to  be  fixed  at  sixty-five  years,  —  the  contribu- 
tion to  be  compulsory.  It  seemed  to  Cham- 
berlain, following  in  the  lead  of  Blackley,  that 
instead  of  compulsion  it  would  be  better  for 
the  government  to  offer  such  inducements  in 
the  way  of  subsidies  as  would  lead  to  the  pay- 

*  P.  Leroy-Beaulieu,  in  VEconomiste  Fran^ais,  July  4,  1891: 
"Panama  etait  I'entreprise  la  plus  charlatanesquc  dc  ce  sicclc;  mais 
void  .  .  .  une  conception  financicre  qui  n'est  pas  moius  charlutan- 
esque  que  celle  defunte  Compagnie  de  Panama." 


156  STATE  INSURANCE 

ments  of  these  contributions.  A  similar  idea 
was  advanced  in  the  fro  jet  Constans.  But 
there  has  been  much  skepticism  as  to  whether 
any  inducements  which  a  government  could 
properly  offer  would  prove  effectual  in  attract- 
ing any  except  the  more  thrifty.  It  is  difficult 
to  impress  vividly  upon  the  minds  of  the 
young  the  danger  of  old-age  poverty.  Neither 
logic  nor  statistics  seem  to  carry  weight  with 
them.  Whatever  the  risk  of  such  a  disaster, 
looked  at  from  a  distance  of  forty  years  it 
seems  very  remote. 

The  tendency  of  late  has  been  to  reject  all 
optional  plans  —  except  as  they  are  already 
furnished  —  as  ineffectual  without  compul- 
sion, and  to  reject  compulsion  as  unsuited  to 
the  *' free-born  Briton"  or  American. 

In  most  of  the  current  discussion  the  field 
seems  to  be  thus  narrowed  down  to  giving  a 
pension  at  some  age,  either  universally  or  to 
those  who  combine  merit  and  need. 

It  was  the  plan  of  Booth  in  England  fifteen 
years  ago,  and  of  Edward  Everett  Hale  in 
Massachusetts  later,  to  eliminate  entirely  the 
question  of  need  and  to  make  pensions  pay- 
able to  all.  Booth  justifies  the  plan  partly 
upon  the  theory  that  by  this  method  the 
wealthier  classes  who  pay  the  larger  amount  of 
taxes  would  virtually  pay  the  pensions  of  the 
poorer,  the  middle  classes  simply  getting  back 


OLD-AGE  PENSIONS  157 

in  pensions  what  they  had  paid  in  taxes 
toward  the  general  pension  fund.  Certain 
considerations  as  to  the  real  incidence  of  taxes 
are  ignored/  The  expense  of  such  a  scheme 
seems  to  most  minds  appalling  and  in  itself 
sufficient  to  condemn  it  without  further  con- 
sideration. Booth's  estimate  for  England  and 
Wales  was  $85,000,000,  and  for  the  whole 
kingdom  about  $117,000,000,  but  he  claimed 
that  as  an  offset  to  the  rate-payer  there  would 
be  a  very  considerable  reduction  in  poor-rates. 
In  the  discussion  of  the  plan  grave  doubts 
whether  the  estimates  were  high  enough  were 
freely  expressed.  But  it  is  to  be  questioned 
whether  the  expense  of  such  schemes  consti- 
tutes the  gravest  objection,  and  it  is  doubtful 
whether  they  will  receive  much  further  con- 
sideration. 

While  we  seem  to  have  passed  beyond 
schemes  for  universal  pensions,  probably  per- 
manently, the  world  has  gone  far  —  whether 
wisely  or  not  will  be  discussed  later  —  in  the 
direction  of  pensions  as  a  gratuity  from  the 
state,  without  compulsion,  without  contribu- 
tion, but  with  a  sharp  discrimination  as  to  the 
need  and  merit  of  the  applicant.  The  schemes 
already  enacted  into  law  agree  in  limiting  the 
benefit  to  citizens ;  in  requiring  that  the  party 
shall  not  have  been  convicted  within  a  certain 

»  Journal  of  Royal  Statistical  Society,  1891,  liv,  600-643. 


158  STATE  INSURANCE 

time  of  crime  or  serious  misdemeanor;  and 
that  he  shall  not  have  been  a  recipient  of  poor- 
relief.  Those  are  also  excluded  who  have 
a  certain  amount  of  property  or  income,  the 
amount  of  the  pension  if  granted  being  dimin- 
ished according  to  income.  Plans  vary  as  to 
the  mode  of  administration,  the  amount  of 
relief,  and  the  age  at  which  it  shall  commence. 
Denmark  may  be  deemed  the  pioneer  in  this 
field  of  social  legislation.  Her  law  of  1891  is 
administered  by  the  communal  authorities ;  the 
pension  age  is  fixed  at  sixty;  the  amount  of 
the  pension  is  left  indeterminate,  it  being  pro- 
vided only  that  it  should  be  sufficient,  to  be 
adjusted  by  the  authorities.  But  the  idea  took 
root  most  readily  in  New  Zealand  and  the 
Commonwealth  of  Australia,  countries  which 
are  coming  to  be  looked  upon  as  laboratories 
for  experiments  in  social  legislation.  The  law 
of  New  Zealand  was  passed  in  1898,  although 
it  had  been  urged  upon  two  previous  parlia- 
ments. It  provided  for  pensions,  at  sixty-five, 
of  seven  shillings  per  week ;  for  public  exam- 
inations of  applicants  who  are  questioned  as 
to  need,  as  to  previous  records,  and  as  to  pro- 
perty and  income.  By  a  later  act,  1905,  the 
amount  of  the  pension  was  raised  to  ten  shill- 
ings, and  it  was  provided  that  the  magistrate 
might,  in  his  discretion,  conduct  examina- 
tions in  camera.  This  was  for  the  purpose  of 


OLD-AGE  PENSIONS  159 

meeting  the  criticism  that  under  the  earlier 
law  many  worthy  persons  were  unwilling  to 
submit  to  an  examination  in  public.  The 
amendments  were  significant  as  indicating  a 
tendency  in  all  such  legislation  towards  pro- 
visions more  liberal  to  the  beneficiaries, — a 
tendency  to  enlarge  rather  than  to  restrict. 

Victoria  and  New  South  Wales  followed  the 
lead  of  New  Zealand  two  years  later.  The  law 
of  Victoria  contained  a  new  feature  in  leaving 
the  age  at  which  pensions  should  commence 
indeterminate  to  the  extent  of  providing  that 
they  should  be  due  upon  permanent  disability 
if  resulting  from  labor  in  mines  or  any  un- 
healthy or  hazardous  occupation.  Nor  did  it 
fix  absolutely  the  amount  of  the  pension, 
merely  prescribing  a  maximum  of  ten  shillings 
per  week. 

It  is  the  testimony  of  competent  observers 
who  have  made  a  careful  study  of  the  subject 
at  first  hand,  that  these  pension  laws  work 
very  satisfactorily.^  These  observers  place  a 
high  value  upon  the  law  and  its  administra- 
tion in  stimulating  public  interest  and  in  cre- 
ating a  kindlier  appreciation  of  the  hardships 
of  old-age  poverty  and  the  beneficence  of  the 
relief  granted.    The  system  has  acquired  so 

'  Edith  Sellers,  "  In  Danish  and  Russian  Old  Ape  Homos,"  Nine- 
tccnlh  Ccnturi/,  Hi,  643;  II.  D.  Lloyd,  In  Newest  England,  p.  S62; 
F.  Parsons,  The  Story  of  New  Zealand,  p.  461. 


160  STATE  INSURANCE 

strong  a  hold  upon  the  public  in  these  Austra- 
lasian colonies  that  it  will  be  very  difficult  to 
effect  any  legislation  in  the  direction  of  meth- 
ods economically  more  sound. 

The  old-age  pension  act  of  England  ^  which 
has  been  passed  recently,  to  go  into  effect  on 
January  1, 1909,  follows  substantially  the  gen- 
eral lines  of  the  New  Zealand  law.  It  provides 
for  pensions  of  five  shillings  a  week,  commenc- 
ing at  the  age  of  seventy,  the  applicant  being 
required  to  make  out  a  case  of  merit  and  need. 
The  speech  of  Asquith  outlines  the  plan  and 
discusses  somewhat  elaborately  the  details. 
He  estimated  the  cost  at  $30,000,000  to 
$37,500,000,  but  others  have  placed  it  at 
$57,500,000.^  Financial  considerations  deter- 
mined the  pension  age,  it  being  calculated  that 
the  cost  with  the  pension  age  at  sixty-five 
would  be  about  sixty-four  per  cent  greater 
than  at  seventy,  —  a  very  serious  addition  to 
the  public  burden.  It  was  explained  that  the 
amount  of  the  weekly  pension,  which  seems 
meagre,  was  intended  to  eke  out  rather  than 
to  supply  an  adequate  income.  It  may  be 
deemed  almost  certain  that  there  will  be  early 
agitation  in  favor  both  of  lowering  the  pension 
age  to  sixty-five  and  of  increasing  the  weekly 
allowance. 

'  8  Edw.  VII,  ch.  40. 

'  Balfour,  Speech  in  House  of  Commons,  Xondon  Times,  July  10. 


OLD-AGE  PENSIONS  161 

As  this  law  has  been  adopted  by  a  parlia- 
ment not  given  to  hasty  or  ill-considered  legis- 
lation, and  is  a  social  experiment  to  be  tried 
on  the  largest  scale  yet  attempted,  it  attracts 
world-wide  attention  and  may  well  furnish  the 
text  for  the  discussion  of  the  group  of  laws  of 
which  it  forms  so  important  a  part. 

The  most  obvious  criticism  to  be  made  upon 
all  such  legislation  is  that  it  is  purely  empir- 
ical, and  that  too  in  a  field  where  mistakes 
are  almost  irretrievable.  The  acute  symptoms 
of  a  serious  malady  seem  to  be  treated  rather 
than  the  disease  itself.  The  social  effects  of 
such  laws,  both  near  and  remote,  are  entirely 
problematical.  Whether  they  will  promote  or 
discourage  thrift,  increase  or  diminish  pauper- 
ism, is  a  matter  upon  which  there  is  no  agree- 
ment. And  it  is  not  probable  that  the  doubt 
can  be  satisfactorily  solved  for  decades  to 
come. 

It  is  quite  within  limits  to  say  that  the 
motive  which  brought  about  the  legislation  in 
England  was  political  rather  than  economic. 
The  social  demand  which  had  been  rising  for 
more  than  thirty  years,  especially  since  the 
agitation  led  by  Canon  Blackley  in  1878, 
made  the  situation  acute.  There  was  an  urgent 
call  upon  Parliament  to  do  something.  The 
elaborate  investigations  of  royal  commissions 
and  parliamentary  committees  had  not  fed  the 


162  STATE  INSURANCE 

hungry  nor  mitigated  the  privations  and  suf- 
fering of  old-age  penury.  The  attitude  of  the 
friendly  societies,  always  hostile  to  any  legis- 
lation which  could  affect  their  growth  or 
prosperity,  had  to  be  taken  into  consideration ; 
they  have  not  infrequently  stood  athwart  the 
pathway  towards  sound  legislation.  There 
was  therefore  the  inevitable  yielding  to  a  pop- 
ular demand.  All  idea  of  compulsion  was 
rejected  with  the  customary  phrases.  It  was 
something  "under  which  the  British  work- 
man was  not  prepared  to  stand."  ^  It  seems 
to  be  always  forgotten  on  such  occasions  that 
the  British  rate-payer  has  been  under  compul- 
sion of  a  very  odious  sort  on  this  very  account 
for  the  past  three  hundred  years. 

Warnings  against  the  proposed  legislation 
and  forebodings  as  to  the  future  were  uttered 
in  the  press  as  well  as  in  the  parliamentary 
debates.  It  was  realized  that  a  mistake  was 
being  made,  not  only  grave  but  irreparable. 

It  had  been  pointed  out  by  Canon  Blackley 
in  the  discussion  of  the  Booth  scheme  how  dif- 
ficult, almost  impossible,  it  would  be  to  re- 
strict it  in  the  future.^  That  would  of  course 
be  true  generally  of  legislation  enacted  in 
obedience  to  an  unreasonable  popular  de- 
mand.   If  a  pension  scheme  were  made  uni- 

*  Asquith,  Speech  at  Birmingham,  London  Times,  June  20,  1908. 
'  Journal  of  Royal  Statistical  Society,  Iv,  67. 


OLD-AGE  PENSIONS  163 

versal,  it  would  be  impracticable  afterwards  to 
limit  it  to  the  meritorious  and  the  needy;  if 
made  gratuitous,  to  make  it  either  wholly  or 
in  part  contributory;  if  optional,  to  make  it 
compulsory. 

It  was  said  of  the  English  bill  by  Arthur 
Chamberlain  in  the  House  of  Commons  that 
if  it  should  become  a  law  any  contributory 
scheme  would  be  impossible  in  the  present  or 
the  future,  and  the  "Times"  editorially  de- 
clared that  no  one  believed  in  it  or  thought  it 
would  solve  any  diflSculty,  and  that  it  would 
perhaps  be  impossible  to  "revert  to  any  scheme 
based  on  scientific  and  economic  principles."* 

It  has  been  claimed  that  statistics  show  that 
in  Great  Britain,  out  of  1000  men  living  at  the 
age  of  twenty,  500  will  be  living  at  sixty-five, 
and  200  after  reaching  that  age  will  become 
paupers.  It  has  been  stated  too  that  eight 
ninths  of  the  pauperism  beyond  that  age  is 
old-age  pauperism.^  A  wage  census  cited  by 
the  Chancellor  of  the  Exchequer  shows  that 
fifty-seven  per  cent  of  the  wage-earners  of  the 
kingdom  earn  less  than  twenty-five  shillings 
per  week.  These  figures  are  significant  of  a 
situation  whose  gravity  need  not  be  empha- 
sized. It  was  time  for  Great  Britain  to  act. 
But  she  has  embarked  upon  an  uncharted  sea. 

*  London  Times,  May  G,  June  10,  et  passim. 
»  Booth,  sup.  cit.  p.  C31. 


164  STATE  INSURANCE 

She  enters  upon  an  experiment  whose  cost  will 
be  enormous  though  vague.  It  can  hardly  be 
doubted  that  she  has  made  a  colossal  blunder 
of  which  the  financial  cost  will  be  almost  neg- 
ligible compared  with  the  serious  economic 
consequences.  The  return  to  sane  legislation 
will  be  slow  and  painful. 

In  the  discussion  of  the  subject  of  old-age 
relief  it  is  not  always  clearly  seen  that  there 
are  two  problems  involved :  To  cure  a  system 
which  is  radically  defective  and  to  alleviate 
the  present  evils  which  are  the  result  of  that 
system.  The  treatment  which  is  appropriate 
for  the  relief  of  the  acute  suffering  from  the 
disease  has  no  necessary  relation  to  the  cure  of 
the  disease  itself.  From  whatever  point  of  view 
we  look  at  it,  we  must  agree  that  old-age  pov- 
erty is  the  result  of  an  industrial  or  economic 
system  which  is  at  fault  somewhere.  The  cor- 
rection must  come  through  radical  legislation, 
but  upon  scientific  economic  principles. 

Unquestionably  relief  for  the  aged  pauper 
of  to-day  must  be  sought  through  legislation, 
provisionally  for  the  prospective  pauper  of  ten 
or  twenty  years  hence ;  but  we  may  not  wisely 
by  the  same  law  seek  to  deal  with  the  future 
of  the  young  man  of  thirty  or  twenty  in  view  of 
a  possible  catastrophe  forty  or  fifty  years  in  the 
future,  which  might  be  averted  by  rational 
treatment.    In  the  one  case  we  attempt  to 


OLD-AGE  PENSIONS  165 

atone,  in  a  rude  fashion,  for  an  error  com- 
mitted long  ago;  in  the  other  we  propose  to 
provide  for  an  error  which  we  are  to  commit 
continuously  and  indefinitely. 

It  is  becoming  the  fashion  to  speak  of  pro- 
vision for  old-age  pauperism  as  an  act  of  right 
and  justice  and  not  of  charity ;  but  in  the  na- 
ture of  the  case  there  can  be  only  a  rude  sem- 
blance of  justice  in  methods  proposed  by  leg- 
islation like  that  in  England  and  New  Zealand. 
The  examinations  into  the  merits  of  applicants 
must  necessarily  be  somewhat  inquisitorial.  It 
was  humorously  suggested  in  the  debate  in  the 
House  of  Commons  that  there  was  not  a  mem- 
ber of  the  House  who  could  qualify  on  the  in- 
dustrial test  imposed  by  the  English  Act  of 
1908,  that  he  had  always  worked  according 
to  his  ability.  As  the  administration  of  the 
law  depends  largely  upon  local  boards,  there 
will  be  much  diversity  in  its  interpretation. 
Possibly  in  effect  there  will  be  merely  an- 
other grade  of  poor-relief ;  —  the  almshouse 
or  the  workhouse  for  the  lowest  class  of 
paupers;  outdoor  relief  for  those  who  are 
deemed  more  worthy,  perhaps  for  many  who 
fail  to  furnish  proof  as  to  age  or  merit;  and 
pensions  for  the  deserving  poor.  There  will  be 
little  gain,  from  the  moral  standpoint,  if  the 
recipient  of  a  pension  is  still  looked  upon  as 
accepting  charity. 


166  STATE  INSURANCE 

But  of  those  elevated  to  the  ignoble  nobility 
of  the  deserving  poor  there  must  be  all  degrees 
of  merit.  If  the  state  owes  the  old-age  pauper 
something  as  a  matter  of  justice,  does  it  owe 
him  five  shillings  a  week,  or  ten,  or  some  other 
sum?  If  it  seeks  to  compensate  the  wage- 
earner  for  the  ill-requited  toil  of  fifty  years, 
what  tribunal  could  determine  what  was  his 
due  ?  And  at  what  age  shall  he  be  deemed  to 
have  earned  exemption  from  toil  ?  Shall  it  be 
at  seventy,  or  sixty-five,  or  sixty,  or,  in  the  event 
that  old  age  has  been  brought  on  prematurely 
by  the  nature  of  his  occupation,  at  permanent 
disablement?  In  the  laws  referred  to  it  has 
generally  been  thought  expedient  to  fix  these 
data  arbitrarily  and  to  leave  little  to  the  dis- 
cretion of  those  who  administer  them.  Even 
in  the  exclusion  of  the  least  worthy,  so  called, 
there  must  often  be  a  failure  of  abstract  just- 
ice. We  speak  confidently  about  the  deserts  of 
those  whose  poverty  can  be  traced  to  impro- 
vidence and  vice,  but  we  forget  that  impro- 
vidence and  intemperance  are  often  the  result 
of  poverty,  of  those  hard  industrial  conditions 
which  tend  to  impair  moral  vigor,  to  lessen 
resistance,  and  even  to  disturb  the  natural 
balance  of  men's  minds. 

These  considerations  are  pertinent  as  show- 
ing the  great  difficulties  which  surround  this 
problem  of  old-age  poverty  and  the  danger  of 


OLD-AGE  PENSIONS  1C7 

treating  it  superficially  rather  than  scienti- 
fically. Our  attitude  in  the  past  has  been 
deemed  charitable  rather  than  economic,  but 
it  has  not  been  entitled  to  that  term.  The 
Church  once  enjoined  upon  the  prosperous 
the  duty  of  giving  to  the  poor  in  obedience  to 
a  divine  command  always  binding  upon  the 
hearts  and  consciences  of  Christians.  The 
tax-payer  of  to-day,  yielding  up  poor-rates 
grudgingly,  responding  to  force  rather  than 
any  Christian  or  humane  obligation,  does  not 
belong  in  the  same  category  as  the  mediaeval 
Christian.  The  State  does  not  concern  itself 
as  the  Church  did  as  to  the  state  of  mind  of  the 
giver. 

If  we  reject  as  unscientific  and  in  the  broad- 
est sense  impracticable  the  schemes  outlined 
in  recent  legislation,  what  fundamental  prin- 
ciple shall  be  applied  to  future  projects  .?  The 
answer  can  be  comprehended  in  a  sentence. 
They  must  be  contributory  and  they  cannot 
be  made  effectually  contributory  without  com- 
pulsion. Whether  the  wage-earner  reaches  old- 
age  poverty  through  his  own  fault  or  that  of 
society,  the  fault  should  be  corrected  in  its 
early  rather  than  in  its  late  stages,  when  we 
apply  palliatives  rather  than  remedies.  If  ade- 
quate wages  have  been  wasted  throughout  the 
period  of  the  workman's  industrial  efficiency, 
some  measure  should   prevent  it,  to  the  end 


168  STATE  INSURANCE 

that  we  shall  not  levy  upon  the  thrifty  for  the 
support  of  the  thriftless.  This  sufijgests  con- 
tribution on  the  part  of  the  improvident  and 
necessarily  compulsion. 

If,  on  the  other  hand,  we  conclude  that  the 
old-age  pauper  has  been  the  victim  of  indus- 
trial conditions  which  make  saving  practically 
impossible,  we  should  still  administer  the 
remedy  at  the  beginning;  if  a  portion  of  his 
wages  have  been  withheld  from  him,  an  ac- 
count should  be  kept  of  what  margin  remains 
due. 

In  the  discussion  of  the  scheme  of  con- 
tribution enforced  by  compulsion  we  are  ac- 
customed to  the  sneer  at  compulsory  thrift. 
The  phrase  reveals  a  misconception  of  the 
function  of  such  legislation.  We  may  compel 
the  practice  of  thrift  if  not  the  virtue,  as  we 
may  compel  education  or  obedience  to  crim- 
inal law.  But  we  may  encourage  thrift  among 
the  thrifty  by  removing  the  burden  which  has 
been  imposed  upon  them  of  supplying  the 
defects  of  the  thriftless.  It  might  not  be  over- 
sanguine  to  hope  that  a  habit  of  thrift  would 
be  acquired  even  under  compulsion.  The  law 
of  Elizabeth  has  been  tried  for  three  hundred 
years  as  a  mode  of  dealing  with  the  problem 
of  pauperism,  with  deplorable  results ;  when 
Germany's  experiment  of  compulsory  insur- 
ance for  old  age  has  been  tried  as  long,  what 


OLD-AGE  PENSIONS  169 

may  not  be  expected  in  moral  and  economic 
regeneration ! 

If,  then,  there  must  be  insurance  against 
old  age  and  invalidity,  and  if  it  must  be  con- 
tributory and  compulsory,  how  shall  the 
charges  be  met  ?  There  can  be  but  one  logical 
answer:  The  cost  must  be  borne  by  the  in- 
dustry which  consumes  labor.  The  group  of 
workmen  in  a  given  employment  virtually 
dedicate  their  lives  to  it.  To  it  they  bring  all 
that  they  have  to  offer  of  labor  and  of  indus- 
trial skill  during  life.  They  are  bound  to  it  by 
a  sort  of  inheritance,  by  training,  and  by  the 
immobility  of  labor.  Their  reward  for  toil, 
both  for  the  productive  and  the  unproductive 
periods  of  life,  must,  by  immutable  law,  either 
come  from  that  particular  industry  or  must  at 
some  point  be  supplied  by  society  at  large. 
The  industry  cannot  rightfully  do  less  than 
to  meet  the  obligation.  The  question  of  in- 
cidence is  discussed  elsewhere.^ 

The  subject  of  old-age  and  invalidity  relief 
is  of  transcendent  importance.  No  other 
social  question  of  the  present  more  urgently 
demands  sagacious  legislation.  It  cannot  be 
regarded  simply  from  the  standpoint  of 
finance  or  expediency,  nor  with  regard  to  tem- 
porary relief  of  acute  suffering  which  happens 
to  appeal  to  our  sympathies. 

«  Chapter  VU. 


170  STATE  INSURANCE 

We  must  seek  for  a  solution  which  will  be 
adequate,  not  merely  to  pacify  the  superficial 
sentiment  of  to-day,  but  to  justify  us  in  the 
less  indulgent  but  more  enlightened  judgment 
of  the  future. 


IX 

CONCLUSION 

The  impressive  fact  connected  with  insurance 
for  the  wage-earner  is  his  economic  insecurity. 
He  is  continually  in  a  state  of  unstable  equi- 
librium. However  satisfactory  and  secure  the 
present  may  seem,  the  future  must  be  clouded 
with  uncertainty  and  apprehensions  of  pos- 
sible disaster.  His  prosperity  for  the  present 
moment  depends  upon  his  capacity  for  labor 
and  his  employment  at  a  living  wage ;  but  that 
gives  him  no  assurance  as  to  the  future.  As 
long  as  his  daily  wages  are  exhausted  in  meet- 
ing his  daily  needs,  the  workman  is  gambling 
upon  his  possible  immunity  from  accident, 
sickness,  or  other  misfortune.  Unfortunately 
that  is  the  ordinary  test  of  a  living  wage  —  a 
remuneration  adapted  to  days  of  sunshine  and 
not  to  all  kinds  of  weather  that  may  befall. 

Even  judged  by  this  imperfect  standard,  it 
seems  to  be  the  concurrent  judgment  of  most 
of  those  who  have  examined  the  subject,  with- 
out prejudice  or  self-interest,  that  the  vast 
majority  of  workmen  in  this  country  and  else- 
where receive  less  than  a  living  wage.  Nor, 
viewed  from  another  aspect,  by  a  similar  con- 
currence of  judgment,  does  he  receive  his  due 


172  STATE  INSURANCE 

share  of  the  product  of  labor.  While  there  is 
essentially  a  partnership  between  capital  and 
labor,  one  of  the  parties  arrogantly  and  arbi- 
trarily decrees  what  the  other  shall  receive. 
He  bases  his  action  upon  the  law  of  supply 
and  demand,  but  reserves  to  himself  the  right 
to  take  every  possible  advantage  of  the  im- 
mobility of  labor  and  to  use  the  immense  eco- 
nomic advantage  which  he  has  to  interfere 
with  the  law  of  supply  and  demand  by  arti- 
ficially increasing  the  supply  at  his  pleasure. 
The  great  injustice  which  the  laboring  man 
has  usually  suffered  from  his  contractual  in- 
equality has  been  tremendously  accentuated 
with  the  introduction  of  machinery  and  the 
application  of  steam  and  electricity  to  indus- 
try. 

Meantime  the  state  has  usually  shown  far 
greater  solicitude  for  the  rights  of  property 
than  for  the  rights  of  man.  According  to 
Joseph  Chamberlain :  "The  rights  of  property 
have  been  so  much  extended  that  the  rights  of 
the  community  have  almost  altogether  disap- 
peared, and  it  is  hardly  too  much  to  say  that 
the  prosperity  and  comfort  and  the  liberties 
of  a  great  proportion  of  the  population  have 
been  laid  at  the  feet  of  a  small  number  of  pro- 
prietors, who  neither  toil  nor  spin."  It  has 
been  said  that  all  of  the  jurisprudence  of 
civilized  countries  is  bourgeois  —  which  is  to 


CONCLUSION  173 

say  that  those  who  make  and  interpret  laws 
are  mainly  from  the  bourgeoisie  and  from 
the  upper  classes  and  are  humanly  affected 
by  their  environment.  This  characterization 
finds  illustration  in  the  swift  enactment  of  a 
"Statute  of  Labourers"  frequently  reenacted 
with  cumulative  severity,  condemning  the 
toilers  of  England  to  a  condition  worse  than 
feudal  servitude,  as  compared  with  factory 
acts  and  workmen's  compensation  acts  which 
can  be  successfully  opposed  for  decades. 

These  points  are  alluded  to  as  bearing  upon 
the  claim,  so  frequently  as  so  thoughtlessly 
made,  that  the  wage-earner's  poverty,  help- 
lessness, and  dependence  are  the  result  of  the 
lack  of  thrift  and  of  improvidence,  regardless 
of  the  fact  that  he  makes  no  provision  for  the 
future  for  the  reason  that  he  cannot  even  meet 
the  far  more  imperious  wants  of  the  present. 

But  waiving  the  question  whether  the  work- 
man receives  a  living  wage  measured  by  the 
defective  standard  of  his  daily  needs  under 
normal  conditions,  it  must  be  manifest  that  it 
does  not  usually  go  beyond  that.  The  labor 
contract  is  ordinarily  entered  into  as  though 
there  were  to  be  nothing  but  sunshine  and  fair 
w^eather  in  the  industrial  world. 

How  long,  in  a  given  industry,  a  man's 
capacity  for  labor  may  endure,  whether  fifty 
years  or  —  as  has  been  the  case  in  unhealthy 


174  STATE  INSURANCE 

employments  —  twenty  years  or  ten ;  how 
great  the  average  peril  from  accidents;  what 
additional  losses  from  the  ordinary  vicissi- 
tudes of  life,  —  all  of  these  matters  are  either 
utterly  ignored  or  very  inadequately  consid- 
ered. 

Assuming  that  the  working  capacity  should 
last  fifty  years,  what  ought  an  industry  to  pay 
which  exhausts  that  capacity  in  twenty  years, 
with  a  probability  of  thirty  years  of  invalidity  ? 
What  if  it  threatens  a  loss  of  from  five  to  fif- 
teen per  cent  through  sickness  ?  What  allow- 
ance shall  be  made  for  accidents  with  a  risk 
ranging  from  one  thirty-fifth  of  one  per  cent  to 
ten  per  cent  of  the  wages  ?  And  is  it  tolerable 
that  the  trade  which  involves  the  maximum  of 
risk  shall  pay  even  less  wages  than  the  one  in- 
volving a  minimum  ?  Would  not  a  system  of 
insurance  for  all,  scientifically  adjusted,  un- 
veil the  nature  and  extent  of  defective  scales 
of  wages  and  suggest  a  remedy  which  would 
lead  towards  economic  justice  and  industrial 
equality. 

Starting  with  what  may  be  deemed  a  fair 
rate  of  wages,  judged  by  the  ordinary  stand- 
ards of  the  past,  it  is  actuarially  practicable 
to  determine  the  average  loss  from  premature 
death,  from  invalidity,  from  accidents,  and 
from  sickness ;  what  percentage  of  the  annual 
wage  these  items  in  the  aggregate  constitute, 


CONCLUSION  175 

and  what  must  be  added  to  wages  to  cover 
them. 

It  would  be  unprofitable  at  this  time  to 
discuss  anything  but  the  merest  outline  of 
a  scheme  of  insurance  for  workmen  in  this 
country.  In  general,  the  German  scheme  must 
be  the  guide,  as  it  has  been  for  most  of  the 
countries  of  Europe.  But  the  administration 
of  the  German  law  is  extremely  complex.  This 
complexity  was  largely  the  result  of  compelling 
circumstances.  It  was  necessary  to  take  a  con- 
ciliatory attitude  towards  friendly  societies 
and  other  existing  organizations,  and  to  utilize 
their  machinery;  especially  necessary  to  pre- 
serve to  the  utmost,  in  the  new  law,  the  idea  of 
mutuality  and  self-help  which  those  institu- 
tions had  stimulated.  Thus  the  government 
could  avail  itself  of  the  efficient  machinery 
already  in  operation  and  at  the  same  time  an 
opposition  to  the  insurance  measures,  other- 
wise certain,  was  skillfully  disarmed.  The 
resulting  system,  one  of  great  complexity  and 
infinite  detail,  could  be  greatly  improved  upon 
by  any  state  taking  up  the  subject  anew; 
indeed  it  seems  probable  that  the  German 
administration  of  its  workmen's  insurance 
may  be  radically  revised  in  the  direction  of 
methods  more  simple  and  more  scientific. 
Nor  is  the  adjustment  of  the  incidence  of 
the  burden  of  insurance,  distributed  between 


176  STATE  INSURANCE 

the  state,  the  employer,  and  the  workman — a 
concession,  perhaps,  to  current  prejudices  — 
worthy  of  imitation.  It  is  objectionable,  as 
suggested  elsewhere,  as  serving  to  confuse  and 
disguise  important  economic  facts  and  tending 
to  foster  in  the  minds  of  both  parties  to  the 
labor  contract  the  mischievous  notion  that 
the  workman  is  a  recipient  of  the  bounty  of  the 
employer  or  of  the  state. 

It  would  not  be  difficult  to  frame  a  practical 
scheme  for  workmen's  insurance  for  a  state 
like  Massachusetts.  It  would  perhaps  follow 
in  its  general  features  the  German  law.  It 
would  indicate  those  upon  whom  the  insur- 
ance should  be  obligatory,  the  amount  of  in- 
surance to  be  carried,  the  several  purposes  to 
which  it  should  be  applicable,  the  amount  of 
premiums,  and  the  mode  of  payment.  It  could 
permit  insurance  through  existing  organiza- 
tions but  prescribe  that  it  should  be  effected 
through  the  state  unless  equivalent  provision 
had  been  made  elsewhere  subject  to  the  ap- 
proval of  the  Insurance  Department.  It  might 
contemplate  voluntary  payments  on  the  part 
of  the  insured,  but  direct  that  in  case  of  failure 
to  make  such  payments  the  employer  should 
meet  the  insurance  charges  out  of  the  wages 
of  the  employee. 

The  law  would  specify  minutely  under  what 
conditions  benefits  should  be  paid ;  how  long  a 


CONCLUSION  177 

period  of  disability  from  accidents  should  be 
covered  and  the  amount  payable,  based  upon 
wages ;  how  much  and  what  sick-pay  should 
be  allowed ;  in  what  form  insurance  should  be 
paid  in  the  event  of  death,  whether  by  annui- 
ties or  otherwise ;  at  what  age  pensions  should 
commence  and  what  should  constitute  invalid- 
ity. It  would  also  prescribe  under  what  con- 
ditions medical  and  surgical  attendance  should 
be  rendered  and  make  provision  for  the  con- 
struction of  adequate  hospitals  and  sanatoria. 

For  the  administration  of  such  a  plan  the 
state  is  already  partially  equipped.  It  has  a 
highly  efficient  insurance  department  and  an 
insurance  commissioner  with  large  powers  of 
supervision,  control,  and  direction.  This  de- 
partment can  perform  all  of  the  actuarial  work 
required  for  the  proposed  system.  It  can  pre- 
pare and  publish  tables  of  morbidity  and 
tariffs  of  risks,  somewhat  tentative  at  first  but 
gradually  attaining  a  high  degree  of  accuracy. 
It  could  advise  Richard  Roe  at  any  time  of  life 
and  engaged  in  any  kind  of  employment  just 
what  it  will  cost  him  per  year,  in  a  single 
item,  to  insure  against  death,  accidents,  sick- 
ness, invalidity,  and  old  age. 

The  department  would  doubtless  find  it  con- 
venient to  make  use  of  the  assessors  in  the 
cities  and  towns  throughout  the  state  in  ac- 
quiring the  data  needed  for  its  purposes.    It 


178  STATE  INSURANCE 

would  add  but  slightly  to  the  work  of  the 
assessors,  in  their  annual  canvass  of  the  state, 
to  procure  the  additional  information.  In 
addition  to  the  work  of  the  insurance  depart- 
ment and  the  assessors,  there  would  be  needed 
in  each  town  or  ward  of  a  city  an  insurance 
agent  whose  work  would  be  done  under  the 
direction  of  the  department. 

For  the  inauguration  of  such  a  system  in 
Massachusetts,  for  example,  hardly  more  is 
needed  than  an  intelligent  and  definite  pur- 
pose. There  is  not  needed  the  constructive 
statesmanship  of  a  Bismarck.  The  way  has 
been  blazed ;  the  experiment  of  a  quarter  of  a 
century  ago  has  proved  manifestly  successful. 
"The  Utopia  of  yesterday  has  become  the 
terra  cognita  of  to-day." 


APPENDICES 


APPENDICES 
APPENDIX  A 

(Section  25  of  the  Prussian  Railroad  Law  of  Nov.  3,  1838.) 
"  The  Company  is  required  to  make  good  any  injury 
which  may  arise  to  any  goods  or  any  person  carried  on 
any  railroad,  or  to  other  goods  or  persons,  unless  it  can 
prove  that  such  damage  was  due  to  the  negligence  of  the 
injured  person,  or  the  result  of  unavoidable  external 
accident.  But  the  dangerous  nature  of  the  enterprise  is 
not  an  explanation  of  an  accident  which  excuses  from 
the  payment  of  damages." 


APPENDIX  B 

(Georgia  Laws  of  1855  and  1856,  No.  103,  Sec.  III.) 
The  several  railroad  companies  of  this  state  shall 
be  liable  to  pay  damages  to  any  officer,  agent  or  em- 
ployee of  any  such  company  who  may  be  injured  while 
in  the  service  of  any  such  company,  by  the  carelessness, 
negligence  or  improper  conduct  of  any  of  said  com- 
panies or  any  of  the  other  officers,  agents  or  employees 
of  said  companies  by  the  running  of  the  cars  or  engines 
of  said  companies. 

(Georgia  Code  of  1861.) 

Sec.  2978.  A  railroad  company  shall  be  liable  for 
any  damage  to  persons,  stock  or  other  property,  by  the 
running  of  the  locomotives,  cars  or  other  machinery 
of  such  company,  or  for  damage  done  to  any  person  in 
the  employment  and  service  of  such  company,  unless 
the  company  shall  make  it  appear  that  their  agents 
have  exercised  all  ordinary  and  reasonable  care  and 
diligence,  the  presumption,  in  all  cases,  being  against 
the  company. 

Sec.  2979.  No  person  shall  recover  damages  from 
a  railroad  company  for  injury  to  himself  or  his  property 
when  the  same  is  done  by  his  consent,  or  is  caused  by 
his  negligence.  If  the  complainant  and  the  agents  of 
the  company  are  both  at  fault,  the  former  may  recover, 
but  the  damages  shall  be  diminished  by  the  jury  in  pro- 
portion to  the  amount  of  fault  attributable  to  him. 

Sec.  2980.  If  the  person  injured  is  himself  an 
employee  of  the  company,  and  the  damage  was  caused 
by  another  employee,  and  without  fault  or  negligence 
on  the  part  of  the  person  injured,  his  emplo^Tuent  by 
the  company  shall  be  no  bar  to  recovery. 


APPENDIX  C 

(From  Chapter  106,  Revised  Laws  of  Massachusetts,  with  amend- 
ment of  1906.  The  not  very  important  amendments  of  1908  are  not 
incorporated.  It  is  substantially  the  law  of  1887.  modeled  after  the 
so-called  Gladstone  Act  —  the  EngUsh  law  of  1880.) 

Section  71.  If  personal  injury  is  caused  to  an 
employee,  who,  at  the  time  of  the  injury,  is  in  the  exer- 
cise of  due  care,  by  reason  of: 

First,  A  defect  in  the  condition  of  the  ways,  works 
or  machinery  connected  with  or  used  in  the  business 
of  the  employer,  which  arose  from,  or  had  not  been 
discovered  or  remedied  in  consequence  of,  the  neg- 
ligence of  the  employer  or  of  a  person  in  his  service 
who  had  been  entrusted  by  him  with  the  duty  of 
seeing  that  the  ways,  works  or  machinery  were  in 
proper  condition ;  or. 

Second,  The  negligence  of  a  person  in  the  service 
of  the  employer  who  was  entrusted  with  and  was 
exercising  superintendence  and  whose  sole  or  princi- 
pal duty  was  that  of  superintendence,  or,  in  the 
absence  of  such  superintendent,  of  a  person  acting 
as  superintendent  with  the  authority  or  consent  of 
such  employer;  or. 

Third,  The  negligence  of  a  person  in  the  service 

of  the  employer  who  was  in  charge  or  control  of  a 

signal,  switch,  locomotive  engine  or  train  upon  a 

railroad ; 

tlie  employee,  or  his  legal  representatives,  shall,  subject 

to  the  provisions  of  the  eight  following  sections,  have 

the  same  rights  to  compensation  and  of  action  against 

the  employer  as  if  he  had  not  been  an  employee,  nor  in 

the  service,  nor  engaged  in  the  work,  of  the  employer. 


184  APPENDIX 

A  car  which  is  in  use  by,  or  which  is  in  possession  of, 
a  railroad  corporation  shall  be  considered  as  a  part  of 
the  ways,  works  or  machinery  of  the  corporation  which 
uses  or  has  it  in  possession,  within  the  meaning  of 
clause  one  of  this  section,  whether  it  is  owned  by  such 
corporation  or  by  some  other  company  or  person.  One 
or  more  cars  which  are  in  motion,  whether  attached  to 
an  engine  or  not,  shall  constitute  a  train  within  the 
meaning  of  clause  three  of  this  section,  and  whoever  as 
a  part  of  his  duty  for  the  time  being  physically  controls 
or  directs  the  movements  of  a  signal,  switch,  locomotive 
engine  or  train  shall  be  deemed  to  be  a  person  in  charge 
or  control  of  a  signal,  switch,  locomotive  engine  or  train 
within  the  meaning  of  said  clause. 

Section  72.  (As  amended  by  Chapter  370  of  the 
Acts  of  1906.)  If  the  injury  described  in  the  preceding 
section  results  in  the  death  of  the  employee,  and  such 
death  is  not  instantaneous  or  is  preceded  by  conscious 
suffering,  and  if  there  is  any  person  who  would  have 
been  entitled  to  bring  an  action  under  the  provisions 
of  the  following  section,  the  legal  representatives  of 
said  employee  may,  in  the  action  brought  under  the 
provisions  of  the  preceding  section,  recover  damages 
for  the  death  in  addition  to  those  for  the  injury ;  and  in 
the  same  action,  under  a  separate  count  at  common  law, 
may  recover  damages  for  conscious  suffering  resulting 
from  the  same  injury. 

Section  73.  If,  as  the  result  of  the  negligence  of  an 
employer  himself,  or  of  a  person  for  whose  negligence 
an  employer  is  liable  under  the  provisions  of  section 
seventy-one,  an  employee  is  instantly  killed,  or  dies 
without  conscious  suffering,  his  widow,  or,  if  he  leaves 
no  widow,  his  next  of  kin,  who,  at  the  time  of  his 
death,   were  dependent  upon  his  wages  for  support, 


APPENDIX  185 

shall  have  a  right  of  action  for  damages  against  the 
employer. 

Section  74.  If,  under  the  provisions  of  either  of  the 
two  preceding  sections,  damages  are  awarded  for  the 
death,  they  shall  be  assessed  with  reference  to  the  degree 
of  culpability  of  the  employer  or  of  the  person  for  whose 
negligence  the  employer  is  liable. 

The  amount  of  damages  which  may  be  awarded  in 
an  action  under  the  provisions  of  section  seventy-one 
for  a  personal  injury  to  an  employee,  in  which  no  dam- 
ages for  his  death  are  awarded  under  the  provisions 
of  section  seventy-two,  shall  not  exceed  four  thousand 
dollars. 

The  amount  of  damages  which  may  be  awarded  in 
such  action,  if  damages  for  his  death  are  awarded  under 
the  provisions  of  section  seventy-two,  shall  not  exceed 
five  thousand  dollars  for  both  the  injury  and  the  death, 
and  shall  be  apportioned  by  the  jury  between  the  legal 
representatives  of  the  employee  and  the  persons  who 
would  have  been  entitled,  under  the  provisions  of  sec- 
tion seventy-three,  to  bring  an  action  for  his  death  if  it 
had  been  instantaneous  or  without  conscious  suffering. 

The  amount  of  damages  which  may  be  awarded  in 
an  action  brought  under  the  provisions  of  section 
seventy-three  shall  not  be  less  than  five  hundred  nor 
more  than  five  thousand  dollars. 

Section  75.  No  action  for  the  recovery  of  damages 
for  injury  or  death  under  the  provisions  of  sections 
seventy-one  to  seventy-four,  inclusive,  shall  be  main- 
tained unless  notice  of  the  time,  place  and  cause  of  the 
injury  is  given  to  the  employer  within  sixty  days,  and 
the  action  is  commenced  within  one  year,  after  the  acci- 
dent which  causes  the  injury  or  death.  Such  notice  shall 
be  in  writing,  signed  by  the  person  injured  or  by  a  per- 


186  APPENDIX 

son  in  his  behalf ;  but  if  from  physical  or  mental  incapac- 
ity it  is  impossible  for  the  person  injured  to  give  the 
notice  within  the  time  provided  in  this  section,  he  may 
give  it  within  ten  days  after  such  incapacity  has  been 
removed,  and  if  he  dies  without  having  given  the  notice 
and  without  having  been  for  ten  days  at  any  time  after 
his  injury  of  sufficient  capacity  to  give  it,  his  executor 
or  administrator  may  give  such  notice  within  sixty  days 
after  his  appointment.  A  notice  given  under  the  provi- 
sions of  this  section  shall  not  be  held  invalid  or  insuffi- 
cient solely  by  the  reason  of  an  inaccuracy  in  stating  the 
time,  place  or  cause  of  the  injury,  if  it  is  shown  that 
there  was  no  intention  to  mislead,  and  that  the  employer 
was  not  in  fact  misled  thereby.  The  provisions  of  sec- 
tion twenty-two  of  chapter  fifty-one  shall  apply  to 
notices  under  the  provisions  of  this  section. 

Section  76.  If  an  employer  enters  into  a  contract, 
written  or  verbal,  with  an  independent  contractor  to  do 
part  of  such  employer's  work,  or  if  such  contractor 
enters  into  a  contract  with  a  sub-contractor  to  do  all  or 
any  part  of  the  work  comprised  in  such  contractor's 
contract  with  the  employer,  such  contract  or  sub- 
contract shall  not  bar  the  liability  of  the  employer  for 
injuries  to  the  employees  of  such  contractor  or  sub- 
contractor, caused  by  any  defect  in  the  condition  of  the 
ways,  works,  machinery  or  plant,  if  they  are  the  pro- 
perty of  the  employer  or  are  furnished  by  him  and  if 
such  defect  arose,  or  had  not  been  discovered  or  reme- 
died, through  the  negligence  of  the  employer  or  of  some 
person  entrusted  by  him  with  the  duty  of  seeing  that 
they  were  in  proper  condition. 

Section  77.  An  employee  or  his  legal  representatives 
shall  not  be  entitled,  under  the  provisions  of  sections 
seventy-one  to  seventy-four,  inclusive,  to  any  right  of 


APPENDIX  187 

action  for  damages  against  his  employer  if  such  em- 
ployee knew  of  the  defect  or  negligence  which  caused 
the  injury,  and  failed  within  a  reasonalDle  time  to  give, 
or  cause  to  be  given,  information  thereof  to  the  em- 
ployer, or  to  some  person  superior  to  himself  in  the 
service  of  the  employer  who  was  entrusted  with  general 
superintendence. 

Section  78.  An  employer  who  shall  have  contributed 
to  an  insurance  fund  created  and  maintained  for  the 
mutual  purpose  of  indemnifying  an  employee  for  per- 
sonal injuries  for  which  compensation  may  be  recov- 
ered under  the  provisions  of  sections  seventy-one  to 
seventy-four,  inclusive,  or  to  any  relief  society  formed 
under  the  provisions  of  sections  seventeen,  eighteen  and 
nineteen  of  chapter  one  hundred  and  twenty-five,  may 
prove,  in  mitigation  of  the  damages  recoverable  by  an 
employee  under  the  provisions  of  said  sections,  such 
proportion  of  the  pecuniary  benefit  which  has  been 
received  by  such  employee  from  any  such  fund  or 
society  on  account  of  such  contribution  of  said  em- 
ployer as  the  contribution  of  such  employer  to  such 
fund  or  society  bears  to  the  whole  contribution  thereto. 

Section  79.  The  provisions  of  the  eight  preceding 
sections  shall  not  apply  to  injuries  caused  to  domestic 
servants  or  farm  laborers  by  fellow  employees. 


APPENDIX  D 

BRITISH  WORKMEN'S  COMPENSATION  ACT  OF  1906. 
An  Act  to  consolidate  and  amend  the  law  with  respect 

to  compensation  to  workmen  for  injuries  sufiFered  in 

the  course  of  their  employment  [21st  December, 

1906]. 

Be  it  enacted  by  .  .  .  Parliament  assembled,  and  by 
the  authority  of  the  same,  as  follows: 

1,  —  (1)  If  in  any  emplojTnent  personal  injury  by 
accident  arising  out  of  and  in  the  course  of  the  employ- 
ment is  caused  to  a  workman,  his  employer  shall,  subject 
as  hereinafter  mentioned,  be  liable  to  pay  compensation 
in  accordance  with  the  first  schedule  to  this  act. 

(2)  Provided  that  — 

(a)  The  employer  shall  not  be  liable  under  this  act  in 
respect  of  any  injury  which  does  not  disable  the  work- 
man for  a  period  of  at  least  one  week  from  earning  full 
wages  at  the  work  at  which  he  was  employed; 

(6)  When  the  injury  was  caused  by  the  personal  neg- 
ligence or  willful  act  of  the  employer  or  of  some  person 
for  whose  act  or  default  the  employer  is  responsible, 
nothing  in  this  act  shall  affect  any  civil  liability  of  the 
employer,  but  in  that  case  the  workman  may,  at  his 
option,  either  claim  compensation  under  this  act  or 
take  proceedings  independently  of  this  act;  but  the 
employer  shall  not  be  liable  to  pay  compensation  for 
injury  to  a  workman  by  accident  arising  out  of  and  in 
the  course  of  the  employment  both  independently  of 
and  also  under  this  act,  and  shall  not  be  liable  to  any 
proceedings  independently  of  this  act,  except  in  case  of 
such  personal  negligence  or  willful  act  as  aforesaid; 


APPENDIX  18a 

(c)  If  it  is  proved  that  the  injury  to  a  workman  is 
attributable  to  the  serious  and  willful  misconduct  of 
that  workman,  any  compensation  claimed  in  respect 
of  that  injuiy  shall,  unless  the  injury  results  in  death 
or  serious  and  permanent  disablement,  be  disallowed, 

(3)  If  any  question  arises  in  any  proceedings  under 
this  act  as  to  the  liability  to  pay  compensation  under 
this  act  (including  any  question  as  to  whether  the  per- 
son injured  is  a  workman  to  whom  this  act  applies), 
or  as  to  the  amount  or  duration  of  compensation  under 
this  act,  the  question,  if  not  settled  by  agreement,  shall, 
subject  to  the  provisions  of  the  first  schedule  to  this  act, 
be  settled  by  arbitration,  in  accordance  with  the  second 
schedule  to  this  act. 

(4)  If,  within  the  time  hereinafter  in  this  act  limited 
for  taking  proceedings,  an  action  is  brought  to  recover 
damages  independently  of  this  act  for  injury  caused  by 
any  accident,  and  it  is  determined  in  such  action  that 
the  injury  is  one  for  which  the  employer  is  not  liable  in 
such  action,  but  that  he  would  have  been  liable  to  pay 
compensation  under  the  provisions  of  this  act,  the 
action  shall  be  dismissed;  but  the  court  in  which  the 
action  is  tried  shall,  if  the  plaintiff  so  choose,  proceed 
to  assess  such  compensation,  but  may  deduct  from  such 
compensation  all  or  part  of  the  costs  which,  in  its  judg- 
ment, have  been  caused  by  the  plaintiff  bringing  the 
action  instead  of  proceeding  under  this  act.  In  any 
proceeding  under  this  subsection,  when  the  court  as- 
sesses the  compensation  it  shall  give  a  certificate  of 
the  compensation  it  has  awarded  and  the  directions 
it  has  given  as  to  the  deduction  for  costs,  and  such 
certificate  shall  have  the  force  and  effect  of  an  award 
under  this  act. 

(5)  Nothing  in  this  act  shall  affect  any  proceeding 


190  APPENDIX 

for  a  fine  under  the  enactments  relating  to  mines,  fac- 
tories, or  workshops,  or  the  application  of  any  such 
fine. 

2.  —  (1)  Proceedings  for  the  recovery  under  this  act 
of  compensation  for  an  injury  shall  not  be  maintainable 
unless  notice  of  the  accident  has  been  given  as  soon  as 
practicable  after  the  happening  thereof  and  before  the 
workman  has  voluntarily  left  the  employment  in  which 
he  was  injured,  and  unless  the  claim  for  compensation 
with  respect  to  such  accident  has  been  made  within  six 
months  from  the  occurrence  of  the  accident  causing 
the  injury,  or,  in  case  of  death,  within  six  months 
from  the  time  of  death : 

Provided  always  that  — 

(a)  The  want  of  or  any  defect  or  inaccuracy  in  such 
notice  shall  not  be  a  bar  to  the  maintenance  of  such 
proceedings  if  it  is  found  in  the  proceedings  for  settling 
the  claim  that  the  employer  is  not,  or  would  not,  if  a 
notice  or  an  amended  notice  were  then  given  and  the 
hearing  postponed,  be  prejudiced  in  his  defense  by 
the  want,  defect,  or  inaccuracy,  or  that  such  want, 
defect,  or  inaccuracy  was  occasioned  by  mistake,  ab- 
sence from  the  United  Kingdom,  or  other  reasonable 
cause;  and 

(b)  The  failure  to  make  a  claim  within  the  period 
above  specified  shall  not  be  a  bar  to  the  maintenance  of 
such  proceedings  if  it  is  found  that  the  failure  was  occa- 
sioned by  mistake,  absence  from  the  United  Kingdom, 
or  other  reasonable  cause. 

(2)  Notice  in  respect  of  an  injury  under  this  act 
shall  give  the  name  and  address  of  the  person  in- 
jured, and  shall  state  in  ordinary  language  the  cause 
of  the  injury  and  the  date  at  which  the  accident  hap- 
pened, and  shall  be  served  on  the  employer,  or,  if 


APPENDIX  191 

there  is  more  than  one  employer,  upon  one  of  such 
employers. 

(3)  The  notice  may  be  served  by  delivering  the  same 
at,  or  sending  it  by  post  in  a  registered  letter  addressed 
to,  the  residence  or  place  of  business  of  the  person  on 
whom  it  is  to  be  served. 

(4)  Where  the  employer  is  a  body  of  persons,  cor- 
porate or  unincorporate,  the  notice  may  also  be  served 
by  delivering  the  same  at,  or  by  sending  it  by  post  in 
a  registered  letter  addressed  to,  the  employer  at  the 
office,  or,  if  there  be  more  than  one  office,  any  one  of 
the  offices  of  such  body. 

3.  —  (1)  If  the  registrar  of  friendly  societies,  after 
taking  steps  to  ascertain  the  views  of  the  employer  and 
workmen,  certifies  that  any  scheme  of  compensation, 
benefit,  or  insurance  for  the  workmen  of  an  employer  in 
any  emploj-ment,  whether  or  not  such  scheme  includes 
other  employers  and  their  workmen,  provides  scales  of 
compensation  not  less  favorable  to  the  workmen  and 
their  dependents  than  the  corresponding  scales  con- 
tained in  this  act,  and  that,  where  the  scheme  provides 
for  contributions  by  the  workmen,  the  scheme  confers 
benefits  at  least  equivalent  to  those  contributions,  in 
addition  to  the  benefits  to  which  the  workmen  would 
have  been  entitled  under  this  act,  and  that  a  majority 
(to  be  ascertained  by  ballot)  of  the  workmen  to  whom 
the  scheme  is  applicable  are  in  favor  of  such  scheme, 
the  employer  may,  whilst  the  certificate  is  in  force,  con- 
tract with  any  of  his  workmen  that  the  provisions  of  the 
scheme  shall  be  substituted  for  the  provisions  of  this 
act,  and  thereupon  the  employer  shall  be  liable  only  in 
accordance  with  the  scheme,  but,  save  as  aforesaid,  this 
act  shall  apply  notwithstanding  any  contract  to  the  con- 
trary made  after  the  commencement  of  this  act. 


192  APPENDIX 

(2)  The  registrar  may  give  a  certificate  to  expire  at 
the  end  of  a  limited  period  of  not  less  than  five  years, 
and  may  from  time  to  time  renew  with  or  without  mod- 
ifications such  a  certificate  to  expire  at  the  end  of  the 
period  for  which  it  is  renewed. 

(3)  No  scheme  shall  be  so  certified  which  contains 
an  obligation  upon  the  workmen  to  join  the  scheme  as 
a  condition  of  their  hiring,  or  which  does  not  contain 
provisions  enabling  a  workman  to  withdraw  from  the 
scheme, 

(4)  If  complaint  is  made  to  the  registrar  of  friendly 
societies  by  or  on  behalf  of  the  workmen  of  any  em- 
ployer that  the  benefits  conferred  by  any  scheme  no 
longer  conform  to  the  conditions  stated  in  subsection 
(1)  of  this  section,  or  that  the  provisions  of  such  scheme 
are  being  violated,  or  that  the  scheme  is  not  being  fairly 
administered,  or  that  satisfactory  reasons  exist  for 
revoking  the  certificate,  the  registrar  shall  examine  into 
the  complaint,  and,  if  satisfied  that  good  cause  exists  for 
such  complaint,  shall,  unless  the  cause  of  complaint  is 
removed,  revoke  the  certificate. 

(5)  When  a  certificate  is  revoked  or  expires,  any 
moneys  or  securities  held  for  the  purpose  of  the  scheme 
shall,  after  due  provision  has  been  made  to  discharge 
the  liabilities  already  accrued,  be  distributed  as  may  be 
arranged  between  the  employer  and  workmen,  or  as 
may  be  determined  by  the  registrar  of  friendly  societies 
in  the  event  of  a  difference  of  opinion. 

(6)  Whenever  a  scheme  has  been  certified  as  afore- 
said, it  shall  be  the  duty  of  the  employer  to  answer  all 
such  inquiries  and  to  furnish  all  such  accounts  in  regard 
to  the  scheme  as  may  be  made  or  required  by  the  regis- 
trar of  friendly  societies. 

(7)  The  chief  registrar  of  friendly  societies  shall 


APPENDIX  193 

include  in  his  annual  report  the  particulars  of  the  pro- 
ceedings of  the  registrar  under  this  act. 

(8)  The  chief  registrar  of  friendly  societies  may 
make  regulations  for  the  purpose  of  carrying  this  sec- 
tion into  effect. 

4.  —  (1)  Where  any  person  (in  this  section  referred 
to  as  the  principal),  in  the  course  of  or  for  the  purposes 
of  his  trade  or  business,  contracts  with  any  other  person 
(in  this  section  referred  to  as  the  contractor)  for  the 
execution  by  or  under  the  contractor  of  the  whole  or 
any  part  of  any  work  undertaken  by  the  principal,  the 
principal  shall  be  liable  to  pay  to  any  workman  era- 
ployed  in  the  execution  of  the  work  any  compensation 
under  this  act  which  he  would  have  been  liable  to  pay 
if  that  workman  had  been  immediately  employed  by 
him ;  and  where  compensation  is  claimed  from  or  pro- 
ceedings are  taken  against  the  principal,  then,  in  the 
application  of  this  act,  references  to  the  principal 
shall  be  substituted  for  references  to  the  employer, 
except  that  the  amount  of  compensation  shall  be  cal- 
culated with  reference  to  the  earnings  of  the  workman 
under  the  employer  by  whom  he  is  immediately  em- 
ployed : 

Provided  that,  where  the  contract  relates  to  thresh- 
ing, plowing,  or  other  agricultural  work,  and  the  con- 
tractor provides  and  uses  machinery  driven  by  mechan- 
ical power  for  the  purpose  of  such  work,  he  and  he  alone 
shall  be  liable  under  this  act  to  pay  compensation  to  any 
workman  employed  by  him  on  such  work. 

(2)  Where  the  principal  is  liable  to  pay  compensa- 
tion under  this  section,  he  shall  be  entitled  to  be  in- 
demnified by  any  person  who  would  have  been  liable  to 
pay  compensation  to  the  workman  independently  of  this 
section,  and  all  questions  as  to  the  right  to  and  amount 


194  APPENDIX 

of  any  such  indemnity  shall  in  default  of  agreement  be 
settled  by  arbitration  under  this  act. 

(3)  Nothing  in  this  section  shall  be  construed  as  pre- 
venting a  workman  recovering  compensation  under  this 
act  from  the  contractor  instead  of  the  principal. 

(4)  This  section  shall  not  apply  in  any  case  where 
the  accident  occurred  elsewhere  than  on,  or  in,  or  about 
premises  on  which  the  principal  has  undertaken  to  exe- 
cute the  work  or  which  are  otherwise  under  his  control 
or  management. 

5.  —  (1)  Where  any  employer  has  entered  into  a 
contract  with  any  insurers  in  respect  of  any  liability 
under  this  act  to  any  workman,  then,  in  the  event  of  the 
employer  becoming  bankrupt,  or  making  a  composi- 
tion or  arrangement  with  his  creditors,  or  if  the  em- 
ployer is  a  company  in  the  event  of  the  company  having 
commenced  to  be  wound  up,  the  rights  of  the  employer 
against  the  insurers  as  respects  that  liability  shall,  not- 
withstanding anything  in  the  enactments  relating  to 
bankruptcy  and  the  winding  up  of  companies,  be  trans- 
ferred to  and  vest  in  the  workman,  and  upon  any  such 
transfer  the  insurers  shall  have  the  same  rights  and 
remedies  and  be  subject  to  the  same  liabilities  as  if  they 
were  the  employer,  so  however  that  the  insurers  shall 
not  be  under  any  greater  liability  to  the  workman  than 
they  would  have  been  under  to  the  employer. 

(2)  If  the  liability  of  the  insurers  to  the  workman  is 
less  than  the  liability  of  the  employer  to  the  workman, 
the  workman  may  prove  for  the  balance  in  the  bank- 
ruptcy or  liquidation. 

(3)  There  shall  be  included  among  the  debts  which, 
under  section  one  of  the  Preferential  PaATnents  in 
Bankruptcy  Act,  1888,  and  section  four  of  the  Preferen- 
tial Payments  in  Bankruptcy  (Ireland)  Act,  1889,  are 


APPENDIX  195 

in  the  distribution  of  the  property  of  a  bankrupt  and 
in  the  distribution  of  the  assets  of  a  company  being 
wound  up  to  be  paid  in  priority  to  all  otlier  debts,  the 
amount,  not  exceeding  in  any  individual  case  one  hun- 
dred pounds,  due  in  respect  of  any  compensation  the 
liability  wherefor  accrued  before  the  date  of  the  receiv- 
ing order  or  the  date  of  the  commencement  of  the  wind- 
ing up,  and  those  acts  and  the  Preferential  Payments  in 
Bankruptcy  Amendment  Act,  1897,  shall  have  effect 
accordingly.  Where  the  compensation  is  a  weekly  pay- 
ment, the  amount  due  in  respect  thereof  shall,  for  the 
purposes  of  this  provision,  be  taken  to  be  the  amount 
of  the  lump  sum  for  which  the  weekly  payment  could, 
if  redeemable,  be  redeemed  if  the  employer  made  an 
application  for  that  purpose  under  the  first  schedule  to 
this  act. 

(4)  In  the  case  of  the  winding  up  of  a  company 
within  the  meaning  of  the  Stannaries  Act,  1887,  such  an 
amount  as  aforesaid,  if  the  compensation  is  payable  to 
a  miner  or  the  dependents  of  a  miner,  shall  have  the  like 
priority  as  is  conferred  on  wages  of  miners  by  section 
nine  of  that  act,  and  that  section  shall  have  effect 
accordingly. 

(5)  The  provisions  of  this  section  with  respect  to 
preferences  and  priorities  shall  not  apply  where  the 
bankrupt  or  the  company  being  wound  up  has  entered 
into  such  a  contract  with  insurers  as  aforesaid. 

(6)  This  section  shall  not  apply  where  a  company  is 
wound  up  voluntarily  merely  for  the  purposes  of  recon- 
struction or  of  amalgamation  with  another  company. 

6.  Where  the  injury  for  which  compensation  is  pay- 
able under  this  act  was  caused  under  circumstances 
creating  a  legal  liai)ility  in  some  person  other  than  the 
employer  to  pay  damages  in  respect  thereof  — 


196  APPENDIX 

(1)  The  workman  may  take  proceeding's  both  against 
that  person  to  recover  damages  and  against  any  person 
liable  to  pay  compensation  under  this  act  for  such  com- 
pensation, but  shall  not  be  entitled  to  recover  both 
damages  and  compensation;  and 

(2)  If  the  workman  has  recovered  compensation 
under  this  act,  the  person  by  whom  the  compensation 
was  paid,  and  any  person  who  has  been  called  on  to  pay 
an  indemnity  under  the  section  of  this  act  relating  to 
subcontracting,  shall  be  entitled  to  be  indemnified  by 
the  person  so  liable  to  pay  damages  as  aforesaid,  and 
all  questions  as  to  the  right  to  and  amount  of  any  such 
indemnity  shall,  in  default  of  agreement,  be  settled  by 
action,  or,  by  consent  of  the  parties,  by  arbitration 
under  this  act. 

7.  —  (1)  This  act  shall  apply  to  masters,  seamen, 
and  apprentices  to  the  sea  service  and  apprentices  in  the 
sea-fishing  service,  provided  that  such  persons  are  work- 
men within  the  meaning  of  this  act,  and  are  members 
of  the  crew  of  any  ship  registered  in  the  United  King- 
dom, or  of  any  other  British  ship  or  vessel  of  which  the 
owner,  or  (if  there  is  more  than  one  owner)  the  manag- 
mg  owner,  or  manager  resides  or  has  his  principal  place 
of  business  in  the  United  Kingdom,  subject  to  the  fol- 
lowing modifications : 

(a)  The  notice  of  accident  and  the  claim  for  com- 
pensation may,  except  where  the  person  injured  is 
the  master,  be  served  on  the  master  of  the  ship  as  if  he 
were  the  employer,  but  where  the  accident  happened 
and  the  incapacity  commenced  on  board  the  ship  it 
shall  not  be  necessary  to  give  any  notice  of  the  acci- 
dent; 

(b)  In  the  case  of  the  death  of  the  master,  seaman,  or 
apprentice,  the  claim  for  compensation  shall  be  made 


APPENDIX  197 

within  six  months  after  news  of  the  death  has  been 
received  by  the  claimant; 

(c)  Where  an  injured  master,  seaman,  or  apprentice 
is  discharged  or  left  behind  in  a  British  possession  or  in 
a  foreign  country,  depositions  respecting  the  circum- 
stances and  nature  of  the  injury  may  be  taken  by  any 
judge  or  magistrate  in  the  British  possession,  and  by 
any  British  consular  officer  in  the  foreign  country,  and 
if  so  taken  shall  be  transmitted  by  the  person  by  whom 
they  are  taken  to  the  Board  of  Trade,  and  such  deposi- 
tion or  certified  copies  thereof  shall  in  any  proceedings 
for  enforcing  the  claim  be  admissible  in  evidence  as 
provided  by  sections  six  hundred  and  ninety-one  and 
six  hundred  and  ninety-five  of  the  Merchant  Shipping 
Act,  1894,  and  those  sections  shall  apply  accordingly; 

(d)  In  the  case  of  the  death  of  a  master,  seaman,  or 
apprentice,  leaving  no  dependents,  no  compensation 
shall  be  payable,  if  the  owner  of  the  ship  is,  under 
the  Merchant  Shipping  Act,  1894,  liable  to  pay  the  ex- 
penses of  burial; 

(e)  The  weekly  payment  shall  not  be  payable  in 
respect  of  the  period  during  which  the  owner  of  the  ship 
is,  under  the  Merchant  Shipping  Act,  1894,  as  amended 
by  any  subsequent  enactment,  or  otherwise,  liable  to 
defray  the  expenses  of  maintenance  of  the  injured 
master,  seaman,  or  apprentice; 

(/)  Any  sum  payable  by  way  of  compensation  by  the 
owner  of  a  ship  under  this  act  shall  be  paid  in  full  not- 
withstanding anything  in  section  five  hundred  and  three 
of  the  Merchant  Shipping  Act,  1894  (which  relates  to 
the  limitation  of  a  shipowner's  lial)ility  in  certain  cases 
of  loss  of  life,  injury,  or  damage),  but  the  limitation  on 
the  owner's  liability  imposed  by  that  section  shall  apply 
to  the  amount  recoverable  by  way  of  indemnity  under 


198  APPENDIX 

the  section  of  this  act  relating  to  remedies  both  against 
employer  and  stranger  as  if  the  indemnity  were  dam- 
ages for  loss  of  life  or  personal  injury; 

(g)  Subsections  (2)  and  (3)  of  section  one  hundred 
and  seventy-four  of  the  Merchant  Shipping  Act,  1894 
(which  relates  to  the  recovery  of  wages  of  seamen  lost 
with  their  ship),  shall  apply  as  respects  proceedings  for 
the  recovery  of  compensation  by  dependents  of  masters, 
seamen,  and  apprentices  lost  with  their  ship  as  they 
apply  with  respect  to  proceedings  for  the  recovery  of 
wages  due  to  seamen  and  apprentices ;  and  proceedings 
for  the  recovery  of  compensation  shall  in  such  a  case 
be  maintainable  if  the  claim  is  made  within  eighteen 
months  of  the  date  at  which  the  ship  is  deemed  to  have 
been  lost  with  all  hands. 

(2)  This  act  shall  not  apply  to  such  members  of  the 
crew  of  a  fishing  vessel  as  are  remunerated  by  shares  in 
the  profits  or  the  gross  earnings  of  the  working  of  such 
vessel. 

(3)  This  section  shall  extend  to  pilots  to  whom  Part 
X  of  the  Merchant  Shipping  Act,  1894,  applies,  as  if  a 
pilot  when  employed  on  any  such  ship  as  aforesaid  were 
a  seaman  and  a  member  of  the  crew. 

8.  —  (1)  Where  — 

(i)  The  certifying  surgeon  appointed  under  the  Fac- 
tory and  Workshop  Act,  1901,  for  the  district  in  which 
a  workman  is  employed  certifies  that  the  workman  is 
suffering  from  a  disease  mentioned  in  the  third  schedule 
to  this  act  and  is  thereby  disabled  from  earning  full 
wages  at  the  work  at  which  he  was  employed ;  or 

(ii)  A  workman  is,  in  pursuance  of  any  special  rules 
or  regulations  made  under  the  Factory  and  Workshop 
Act,  1901,  suspended  from  his  usual  employment  on 
account  of  having  contracted  any  such  disease ;  or 


APPENDIX  199 

(m)  The  death  of  a  workman  is  caused  by  any  such 
disease ; 

and  the  disease  is  due  to  the  nature  of  any  empIo\Tnent 
in  which  the  workman  was  employed  at  any  time 
within  the  tw^elve  months  previous  to  the  date  of  the 
disablement  or  suspension,  whether  under  one  or  more 
employers,  he  or  his  dependents  shall  be  entitled  to 
compensation  under  this  act  as  if  the  disease  or  such 
suspension  as  aforesaid  were  a  personal  injur}'  by  ac- 
cident arising  out  of  and  in  the  course  of  that  employ- 
ment, subject  to  the  following  modifications : 

(a)  The  disablement  or  suspension  shall  be  treated 
as  the  happening  of  the  accident; 

(6)  If  it  is  proved  that  the  workman  has  at  the  time 
of  entering  the  employment  willfully  and  falsely  repre- 
sented himself  in  writing  as  not  having  previously  suf- 
fered from  the  disease,  compensation  shall  not  be 
payable ; 

(c)  The  compensation  shall  be  recoverable  from  the 
employer  who  last  employed  the  workman  during  the 
said  twelve  months  in  the  employment  to  the  nature  of 
which  the  disease  was  due: 

Provided  that  — 

(i)  The  workman  or  his  dependents  if  so  required 
shall  furnish  that  employer  with  such  information  as  to 
the  names  and  addresses  of  all  other  employers  who 
employed  him  in  the  employment  during  the  said 
twelve  months  as  he  or  they  may  possess,  and,  if  such 
information  is  not  furnislicd,  or  is  not  sufficient  to 
enable  that  employer  to  take  proceedings  under  the 
next  following  proviso,  that  employer  upon  proving 
that  the  disease  was  not  contracted  whilst  the  workman 
was  in  his  employment  shall  not  be  liable  to  pay  com- 
pensation ;  and 


200  APPENDIX 

(ii)  If  that  employer  alleges  that  the  disease  was  in 
fact  contracted  whilst  the  workman  was  in  the  employ- 
ment of  some  other  employer,  and  not  whilst  in  his 
employment,  he  may  join  such  other  employer  as  a 
party  to  the  arbitration,  and  if  the  allegation  is  proved 
that  the  other  employer  shall  be  the  employer  from 
whom  the  compensation  is  to  be  recoverable;  and 

(m)  If  the  disease  is  of  such  a  nature  as  to  be  con- 
tracted by  a  gradual  process,  any  other  employers  who 
during  the  said  twelve  months  employed  the  workman 
in  the  emplojTnent  to  the  nature  of  which  the  disease 
was  due  shall  be  liable  to  make  to  the  employer  from 
whom  compensation  is  recoverable  such  contributions 
as,  in  default  of  agreement,  may  be  determined  in  the 
arbitration  under  this  act  for  settling  the  amount  of 
the  compensation ; 

(d)  The  amount  of  the  compensation  shall  be  cal- 
culated with  reference  to  the  earnings  of  the  workman 
under  the  employer  from  whom  the  compensation  is 
recoverable ; 

(e)  The  employer  to  whom  notice  of  the  death,  dis- 
ablement, or  suspension  is  to  be  given  shall  be  the 
employer  who  last  employed  the  workman  during  the 
said  twelve  months  in  the  emploj-ment  to  the  nature  of 
which  the  disease  was  due,  and  the  notice  may  be  given 
notwithstanding  that  the  workman  has  voluntarily  left 
his  employment; 

(/)  If  an  employer  or  a  workman  is  aggrieved  by  the 
action  of  a  certifying  or  other  surgeon  in  giving  or  refus- 
ing to  give  a  certificate  of  disablement  or  in  suspending 
or  refusing  to  suspend  a  workman  for  the  purposes  of 
this  section,  the  matter  shall  in  accordance  with  regula- 
tions made  by  the  secretary  of  state  be  referred  to  a 
medical  referee,  whose  decision  shall  be  final. 


APPENDIX  201 

(2)  If  the  workman  at  or  immediately  before  the  date 
of  the  disablement  or  suspension  was  employed  in  any 
process  mentioned  in  tlie  second  column  of  the  third 
schedule  to  this  act,  and  the  disease  contracted  is  the 
disease  in  the  first  column  of  that  schedule  set  opposite 
the  description  of  the  process,  the  disease,  except  where 
the  certifying  surgeon  certifies  that  in  his  opinion  the 
disease  was  not  due  to  the  nature  of  the  emploNinent, 
shall  be  deemed  to  have  been  due  to  the  nature  of  that 
employment,  unless  the  employer  proves  the  contrary. 

(3)  The  secretary'  of  state  may  make  rules  regulating 
the  duties  and  fees  of  certifying  and  other  surgeons 
(including  dentists)  under  this  section. 

(4)  For  the  purposes  of  this  section  the  date  of  dis- 
ablement shall  be  such  date  as  the  certifying  surgeon 
certifies  as  the  date  on  which  the  disablement  com- 
menced, or,  if  he  is  unable  to  certify  such  a  date,  the 
date  on  which  the  certificate  is  given : 

Provided  that  — 

(a)  Where  the  medical  referee  allows  an  appeal 
against  a  refusal  by  a  certifying  surgeon  to  give  a  certi- 
ficate of  disablement,  the  date  of  disablement  shall  be 
such  date  as  the  medical  referee  may  determine; 

(b)  Where  a  workman  dies  without  having  obtained 
a  certificate  of  disablement,  or  is  at  the  time  of  death 
not  in  receipt  of  a  weekly  paj-mcnt  on  account  of  dis- 
ablement, it  shall  be  the  date  of  death. 

(5)  In  such  cases,  and  subject  to  such  conditions  as 
the  secretary  of  state  may  direct,  a  medical  practitioner 
appointed  by  the  secretary  of  state  for  the  purpose  shall 
have  the  powers  and  duties  of  a  certifying  surgeon  under 
this  section,  and  this  section  shall  be  construed  accord- 
ingly- 

(6)  The  secretary  of  state  may  make    orders  for 


202  APPENDIX 

extending  the  provisions  of  this  section  to  other  diseases 
and  other  processes,  and  to  injuries  due  to  the  nature  of 
any  employment  specified  in  the  order  not  being  injuries 
by  accident,  either  without  modification  or  subject  to 
such  modifications  as  may  be  contained  in  the  order. 

(7)  Where,  after  inquiry  held  on  the  appHcation  of 
any  employers  or  workmen  engaged  in  any  industry  to 
which  this  section  applies,  it  appears  that  a  mutual 
trade  insurance  company  or  society  for  insuring  against 
risks  under  this  section  has  been  established  for  the 
industry,  and  that  a  majority  of  the  employers  engaged 
in  that  industry  are  insured  against  such  risks  in  the 
company  or  society  and  that  the  company  or  society 
consents,  the  secretary  of  state  may,  by  provisional 
order,  require  all  employers  in  that  industry  to  insure 
in  the  company  or  society  upon  such  terms  and  under 
such  conditions  and  subject  to  such  exceptions  as  may 
be  set  forth  in  the  order.  Where  such  a  company  or  so- 
ciety has  been  established,  but  is  confined  to  employers 
in  any  particular  locality  or  of  any  particular  class,  the 
secretary  of  state  may  for  the  purposes  of  this  provision 
treat  the  industry,  as  carried  on  by  employers  in  that 
locality  or  of  that  class,  as  a  separate  industry, 

(8)  A  provisional  order  made  under  this  section  shall 
be  of  no  force  whatever  unless  and  until  it  is  confirmed 
by  Parliament,  and  if,  while  the  bill  confirming  any 
such  order  is  pending  in  either  House  of  Parliament,  a 
petition  is  presented  against  the  order,  the  bill  may  be 
referred  to  a  select  committee,  and  the  petitioner  shall 
be  allowed  to  appear  and  oppose  as  in  the  case  of  pri- 
vate bills,  and  any  act  confirming  any  provisional  order 
under  this  section  may  be  repealed,  altered,  or  amended 
by  a  provisional  order  made  and  confirmed  in  like 
manner. 


APPENDIX  203 

(9)  Any  expenses  incurred  by  the  secretary  of  state 
in  respect  of  any  such  order,  provisional  order,  or  con- 
firming bill  shall  be  defrayed  out  of  moneys  provided  by 
Parliament. 

(10)  Nothing  in  this  section  shall  affect  the  rights 
of  a  workman  to  recover  compensation  in  respect  of 
a  disease  to  which  this  section  does  not  apply,  if  the 
disease  is  a  personal  injury  by  accident  within  the 
meaning  of  this  act. 

9.  —  (1)  This  act  shall  not  apply  to  persons  in  the 
naval  or  military  service  of  the  Crown,  but  otherwise 
shall  apply  to  workmen  employed  by  or  under  the 
Crown  to  whom  this  act  would  apply  if  the  employer 
were  a  private  person  : 

Provided  that  in  the  case  of  a  person  employed  in  the 
private  service  of  the  Crown,  the  head  of  that  depart- 
ment of  the  royal  household  in  which  he  was  employed 
at  the  time  of  the  accident  shall  be  deemed  to  be  his 
employer. 

(2)  The  treasury  may,  by  warrant  laid  before  Parlia- 
ment, modify  for  the  purposes  of  this  act  their  warrant 
made  under  section  one  of  the  Superannuation  Act, 
1887,  and  notwithstanding  anything  in  that  act,  or  any 
such  warrant,  may  frame  schemes  with  a  view  to  their 
being  certified  by  the  registrar  of  friendly  societies 
under  this  act. 

10.  —  (1)  The  secretary  of  state  may  appoint  such 
legally  qualified  medical  practitioners  to  be  medical 
referees  for  the  purposes  of  this  act  as  he  may,  with  the 
sanction  of  the  treasury,  determine,  and  the  remunera- 
tion of,  and  other  expenses  incurred  by,  medical 
referees  under  this  act  shall,  subject  to  regulations  made 
by  the  treasury,  be  paid  out  of  moneys  provided  by 
Parliament. 


204  APPENDIX 

Where  a  medical  referee  has  been  employed  as  a 
medical  practitioner  in  connection  with  any  case  by 
or  on  behalf  of  an  employer  or  workman  or  by  any 
insurers  interested,  he  shall  not  act  as  medical  referee 
in  that  case. 

(2)  The  remuneration  of  an  arbitrator  appointed  by 
a  judge  of  county  courts  under  the  second  schedule  to 
this  act  shall  be  paid  out  of  moneys  provided  by  Parlia- 
ment in  accordance  with  regulations  made  by  the 
treasury. 

11.  —  (1)  If  it  is  alleged  that  the  owners  of  any  ship 
are  liable  as  such  owners  to  pay  compensation  under 
this  act,  and  at  any  time  that  ship  is  found  in  any  port 
or  river  of  England  or  Ireland,  or  within  three  miles  of 
the  coast  thereof,  a  judge  of  any  court  of  record  in  Eng- 
land or  Ireland  may,  upon  its  being  shown  to  him  by 
any  person  applying  in  accordance  w  ith  the  rules  of  the 
court  that  the  owners  are  probably  liable  as  such  to  pay 
such  compensation,  and  that  none  of  the  owners  reside 
in  the  United  Kingdom,  issue  an  order  directed  to  any 
oflBcer  of  customs  or  other  officer  named  by  the  judge 
requiring  him  to  detain  the  ship  until  such  time  as  the 
owners,  agent,  master,  or  consignee  thereof  have  paid 
such  compensation,  or  have  given  securit}%  to  be  ap- 
proved by  the  judge,  to  abide  the  event  of  any  proceed- 
ings that  may  be  instituted  to  recover  such  compensa- 
tion and  to  pay  such  compensation  and  costs  as  may  be 
awarded  thereon ;  and  any  officer  of  customs  or  other 
officer  to  whom  the  order  is  directed  shall  detain  the 
ship  accordingly. 

(2)  In  any  legal  proceeding  to  recover  such  com- 
pensation, the  person  giving  security  shall  be  made 
defendant,  and  the  production  of  the  order  of  the 
judge,  made  in  relation  to  the  security,  shall  be  con- 


APPENDIX  205 

elusive  evidence  of  the  liability  of  the  defendant  to  the 
proceeding. 

(3)  Section  six  hundred  and  ninety-two  of  tlie  Mer- 
chant Shipping  Act,  1894,  shall  apply  to  the  detention 
of  a  ship  under  tliis  act  as  it  applies  to  the  detention  of  a 
ship  under  that  act,  and,  if  the  owner  of  a  ship  is  a  cor- 
poration, it  shall  for  the  purposes  of  this  section  be 
deemed  to  reside  in  the  United  Kingdom  if  it  has  an 
office  in  the  United  Kingdom  at  which  service  of  writs 
can  be  effected. 

12.  —  (1)  Every  employer  in  any  industry  to  which 
the  secretary  of  state  may  direct  that  this  section  shall 
apply  shall,  on  or  before  such  day  in  every  year  as  the 
secretary  of  state  may  direct,  send  to  the  secretary  of 
state  a  correct  return  specifying  the  number  of  injuries 
in  respect  of  which  compensation  has  been  paid  by  him 
under  this  act  during  the  previous  year,  and  the  amount 
of  such  compensation,  together  with  such  other  particu- 
lars as  to  the  compensation  as  the  secretary  of  state 
may  direct,  and  in  default  of  complying  with  this  sec- 
tion shall  be  liable  on  conviction  under  the  Summary 
Jurisdiction  Acts  to  a  fine  not  exceeding  five  pounds 
[$24.33]. 

(2)  Any  regulations  made  by  the  secretary  of  state 
containing  such  directions  as  aforesaid  shall  be  laid 
before  both  Houses  of  Parliament  as  soon  as  may  be 
after  they  are  made. 

13.  In  this  act,  unless  the  context  othen\'ise  re- 
quires, — 

"  Employer"  includes  any  body  of  persons  corporate 
or  unincorporate  and  the  legal  personal  representative 
of  a  deceased  employer,  and,  where  the  services  of  a 
workman  are  temporarily  lent  or  let  on  hire  to  another 
person  by  the  person  with  whom  the  workman  has  en- 


206  APPENDIX 

tered  into  a  contract  of  service  or  apprenticeship,  the 
latter  shall,  for  the  purposes  of  this  act,  be  deemed  to 
continue  to  be  the  employer  of  the  workman  whilst 
he  is  working  for  that  other  person ; 

"  Workman"  does  not  include  any  person  employed 
otherwise  than  by  way  of  manual  labor  whose  remuner- 
ation exceeds  two  hundred  and  fifty  pounds  [$1216.63] 
a  year,  or  a  person  whose  emplo;yTnent  is  of  a  casual 
nature  and  who  is  employed  otherwise  than  for  the  pur- 
poses of  the  employer's  trade  or  business,  or  a  member 
of  a  police  force,  or  an  outworker,  or  a  member  of  the 
employer's  family  dwelling  in  his  house,  but,  save  as 
aforesaid,  means  any  person  who  has  entered  into  or 
works  under  a  contract  of  service  or  apprenticeship 
with  an  employer,  whether  by  way  of  manual  labor, 
clerical  work,  or  otherwise,  and  whether  the  contract  is 
expressed  or  implied,  is  oral  or  in  writing; 

Any  reference  to  a  workman  who  has  been  injured 
shall,  where  the  workman  is  dead,  include  a  reference 
to  his  legal  personal  representative  or  to  his  dependents 
or  other  person  to  whom  or  for  whose  benefit  compensa- 
tion is  payable; 

"Dependents"  means  such  of  the  members  of  the 
workman's  family  as  were  wholly  or  in  part  dependent 
upon  the  earnings  of  the  workman  at  the  time  of  his 
death,  or  would  but  for  the  incapacity  due  to  the  acci- 
dent have  been  so  dependent,  and  where  the  workman, 
being  the  parent  or  grandparent  of  an  illegitimate  child, 
leaves  such  a  child  so  dependent  upon  his  earnings,  or, 
being  an  illegitimate  child,  leaves  a  parent  or  grand- 
parent so  dependent  upon  his  earnings,  shall  include 
such  an  illegitimate  child  and  parent  or  grandparent 
respectively ; 

"Member  of  a  family"  means  wife  or  husband. 


APPENDIX  207 

father,  mother,  grandfather,  grandmother,  stepfather, 
stepmother,  son,  daughter,  grandson,  granddaughter, 
stepson,  stepdaughter,  brother,  sister,  half-brother, 
half-sister ; 

"Ship,"  "vessel,"  "  seaman,"  and  "port"  have  the 
same  meanings  as  in  the  Merchant  Shipping  Act,  1894i ; 

"  Manager,"  in  relation  to  a  ship,  means  the  ship's 
husband  or  other  person  to  whom  the  management  of 
the  ship  is  entrusted  by  or  on  behalf  of  the  owner ; 

"Police  force"  means  a  police  force  to  which  the 
Police  Act,  1890,  or  the  Police  (Scotland)  Act,  1890, 
applies,  the  City  of  London  Police  Force,  the  Royal 
Irish  Constabulary,  and  the  Dublin  Metropolitan 
Police  Force; 

"Outworker"  means  a  person  to  whom  articles  or 
materials  are  given  out  to  be  made  up,  cleaned,  washed, 
altered,  ornamented,  finished,  or  repaired,  or  adapted 
for  sale,  in  his  own  home  or  on  other  premises  not  under 
the  control  or  management  of  the  person  who  gave 
out  the  materials  or  articles ; 

The  exercise  and  performance  of  the  powers  and 
duties  of  a  local  or  other  public  authority  shall,  for  the 
purposes  of  this  act,  be  treated  as  the  trade  or  business 
of  the  authority; 

"County  court,"  "judge  of  the  county  court," 
"  registrar  of  the  county  court,"  "  plaintiff,"  and  "  rules 
of  court,"  as  respects  Scotland,  mean  respectively  sheriff 
court,  sheriff,  sheriff  clerk,  pursuer,  and  act  of  sederunt. 

14.  In  Scotland,  where  a  workman  raises  an  action 
against  his  employer  independently  of  this  act  in  respect 
of  any  injury  caused  by  accident  arising  out  of  and  in 
the  course  of  the  emplo\Tncnt,  the  action,  if  raised 
in  the  sheriff  court  and  concluding  for  damages  under 
the  Employers'  Liability  Act,  1880,  or  alternatively  at 


208  APPENDIX 

common  law  or  under  the  Employers'  Liability  Ac^ 
1880,  shall,  notwithstanding  anything  contained  in  that 
act,  not  be  removed  under  that  act  or  otherwise  to  the 
court  of  session,  nor  shall  it  be  appealed  to  that  court 
otherwise  than  by  appeal  on  a  question  of  law ;  and  for 
the  purposes  of  such  appeal  the  provisions  of  the 
second  schedule  to  this  act  in  regard  to  an  appeal  from 
the  decision  of  the  sheriff  on  any  question  of  law  de- 
termined by  him  as  arbitrator  under  this  act  shall 
apply. 

15.  —  (1)  Any  contract  (other  than  a  contract  sub- 
stituting the  provisions  of  a  scheme  certified  under  the 
Workmen's  Compensation  Act,  1897,  for  the  provisions 
of  that  act)  existing  at  the  commencement  of  this  act, 
whereby  a  workman  relinquishes  any  right  to  compen- 
sation from  the  employer  for  personal  injury  arising 
out  of  and  in  the  course  of  his  €mplo\Tnent,  shall  not, 
for  the  purposes  of  this  act,  be  deemed  to  continue 
after  the  time  at  which  the  workman's  contract  of 
service  would  determine  if  notice  of  the  determina- 
tion thereof  were  given  at  the  commencement  of  this 
act. 

(2)  Every  scheme  under  the  Workmen's  Compen- 
sation Act,  1897,  in  force  at  the  commencement  of  this 
act  shall,  if  recertified  by  the  registrar  of  friendly  socie- 
ties, have  effect  as  if  it  were  a  scheme  under  this  act. 

(3)  The  registrar  shall  recertify  any  such  scheme  if 
it  is  proved  to  his  satisfaction  that  the  scheme  con- 
forms, or  has  been  so  modified  as  to  conform,  with  the 
provisions  of  this  act  as  to  schemes. 

(4)  If  any  such  scheme  has  not  been  so  recertified 
before  the  expiration  of  six  months  from  the  com- 
mencement of  this  act,  the  certificate  thereof  shall  be 
revoked. 


APPENDIX  209 

16.  —  (1)  This  act  shall  come  into  operation  on  the 
first  day  of  July,  nineteen  hundred  and  seven,  but, 
except  so  far  as  it  relates  to  references  to  medical 
referees,  and  proceedings  consequential  thereon,  shall 
not  apply  in  any  case  where  the  accident  happened 
before  the  commencement  of  this  act. 

(2)  The  Workmen's  Compensation  Acts,  1897  and 
1900,  are  hereby  repealed,  but  shall  continue  to  apply 
to  cases  where  the  accident  happened  before  the  com- 
mencement of  this  act,  except  to  the  extent  to  which 
this  act  applies  to  those  cases. 

17.  This  act  may  be  cited  as  the  Workmen's  Com- 
pensation Act,  1906. 

FIRST  SCHEDULE 

Scale  and  Conditions  of  Compensation 

(1)  The  amount  of  compensation  under  this  act  shall 
be  — 

(a)  Where  death  results  from  the  injury  — 
(i)  If  the  workman  leaves  any  dependents  wholly 
dependent  upon  his  earnings,  a  sum  equal  to  his  earn- 
ings in  the  employment  of  the  same  employer  during 
the  three  years  next  preceding  the  injury,  or  the  sum  of 
one  hundred  and  fifty  pounds  [$729.98],  whichever  of 
those  sums  is  the  larger,  but  not  exceeding  in  any  case 
three  hundred  pounds  [$14.")9.95],  provided  that  the 
amount  of  any  weekly  payments  made  under  this  act, 
and  any  lump  sum  paid  in  redemption  thereof,  shall  be 
deducted  from  such  sum,  and,  if  the  period  of  the  work- 
man's employment  by  the  said  employer  has  been  less 
than  the  said  three  years,  then  the  amount  of  his  earn- 
ings during  the  said  three  years  shall  be  deemed  to  be 
one  hundred  and  fifty-six  times  his  average  weekly 


210  APPENDIX 

earnings  during  the  period  of  his  actual  employment 
under  the  said  employer; 

(ii)  If  the  workman  does  not  leave  any  such  de- 
pendents, but  leaves  any  dependents  in  part  dependent 
upon  his  earnings,  such  sum,  not  exceeding  in  any  case 
the  amount  payable  under  the  foregoing  provisions,  as 
may  be  agreed  upon,  or,  in  default  of  agreement,  may 
be  determined,  on  arbitration  under  this  act,  to  be 
reasonable  and  proportionate  to  the  injury  to  the  said 
dependents;  and 

(Hi)  If  he  leaves  no  dependents,  the  reasonable  ex- 
penses of  his  medical  attendance  and  burial,  not 
exceeding  ten  pounds  [$48.67]; 

(6)  Where  total  or  partial  incapacity  for  work  results 
from  the  injury,  a  weekly  payment  during  the  incapac- 
ity not  exceeding  fifty  per  cent  of  his  average  weekly 
earnings  during  the  previous  twelve  months,  if  he  has 
been  so  long  employed,  but  if  not,  then  for  any  less 
period  during  which  he  has  been  in  the  emplojTnent  of 
the  same  employer,  such  weekly  payment  not  to  exceed 
one  pound  [$4.87]; 

Provided  that  — 

(a)  If  the  incapacity  lasts  less  than  two  weeks  no 
compensation  shall  be  payable  in  respect  of  the  first 
week;  and 

(6)  As  respects  the  weekly  payments  during  total 
incapacity  of  a  workman  who  is  under  twenty-one 
years  of  age  at  the  date  of  the  injury,  and  whose  aver- 
age weekly  earnings  are  less  than  twenty  shillings 
[$4.87],  one  hundred  per  cent  shall  be  substituted  for 
fifty  per  cent  of  his  average  weekly  earnings,  but  the 
weekly  payment  shall  in  no  case  exceed  ten  shillings 
[$2.43]. 

(2)  For  the  purposes  of  the  provisions  of  this  sched- 


APPENDIX  211 

ule  relating  to  "earnings"  and  "average  weekly  earn- 
ings" of  a  workman,  the  following  rules  shall  be 
observed : 

(a)  Average  weekly  earnings  shall  be  computed  in 
such  manner  as  is  best  calculated  to  give  the  rate  per 
week  at  which  the  workman  was  being  remunerated. 
Provided  that  where  by  reason  of  the  shortness  of  the 
time  during  which  the  workman  has  been  in  the  em- 
plojTnent  of  his  employer,  or  the  casual  nature  of  the 
employment,  or  the  terms  of  the  employment,  it  is 
impracticable  at  the  date  of  the  accident  to  compute 
the  rate  of  remuneration,  regard  may  be  had  to  the 
average  weekly  amount  which,  during  the  twelve 
months  previous  to  the  accident,  was  being  earned  by 
a  person  in  the  same  grade  employed  at  the  same  work 
by  the  same  employer,  or,  if  there  is  no  person  so  em- 
ployed, by  a  person  in  the  same  grade  employed  in  the 
same  class  of  emplojTnent  and  in  the  same  district ; 

(6)  Where  the  workman  had  entered  into  concurrent 
contracts  of  service  with  two  or  more  employers  under 
which  he  worked  at  one  time  for  one  such  employer  and 
at  another  time  for  another  such  employer,  his  average 
weekly  earnings  shall  be  computed  as  if  his  earnings 
under  all  such  contracts  were  earnings  in  the  employ- 
ment of  the  employer  for  whom  he  was  working  at  the 
time  of  the  accident ; 

(c)  Emplo^Tnent  by  the  same  employer  shall  be  taken 
to  mean  cmplojTnent  by  the  same  employer  in  the  grade 
in  which  the  workman  was  employed  at  the  time  of  the 
accident,  uninterrupted  by  absence  from  work  due  to 
illness  or  any  other  unavoidable  cause; 

(d)  Where  the  employer  has  been  accustomed  to  pay 
to  the  workman  a  sum  to  cover  any  special  expenses 
entailed  on  him  by  the  nature  of  his  employment,  the 


212  APPENDIX 

sum  so  paid  shall  not  be  reckoned  as  part  of  the 
earnings. 

(3)  In  fixing  the  amount  of  the  weekly  payment, 
regard  shall  be  had  to  any  payment,  allowance,  or  bene- 
fit which  the  workman  may  receive  from  the  employer 
during  the  period  of  his  incapacity,  and  in  the  case  of 
partial  incapacity  the  weekly  payment  shall  in  no  case 
exceed  the  difference  between  the  amount  of  the  aver- 
age weekly  earnings  of  the  workman  before  the  accident 
and  the  average  weekly  amount  which  he  is  earning  or 
is  able  to  earn  in  some  suitable  employment  or  business 
after  the  accident,  but  shall  bear  such  relation  to  the 
amount  of  that  difference  as  under  the  circumstances 
of  the  case  may  appear  proper. 

(4)  Where  a  workman  has  given  notice  of  an  acci- 
dent, he  shall,  if  so  required  by  the  employer,  submit 
himself  for  examination  by  a  duly  qualified  medical 
practitioner  provided  and  paid  by  the  employer,  and, 
if  he  refuses  to  submit  himself  to  such  examination,  or 
in  any  way  obstructs  the  same,  his  right  to  compensa- 
tion, and  to  take  or  prosecute  any  proceeding  under  this 
act  in  relation  to  compensation,  shall  be  suspended  until 
such  examination  has  taken  place. 

(5)  The  payment  in  the  case  of  death  shall,  unless 
otherwise  ordered  as  hereinafter  provided,  be  paid  into 
the  county  court,  and  any  sum  so  paid  into  court  shall, 
subject  to  rules  of  court  and  the  provisions  of  this 
schedule,  be  invested,  applied,  or  otherwise  dealt  with 
by  the  court  in  such  manner  as  the  court  in  its  discre- 
tion thinks  fit  for  the  benefit  of  the  persons  entitled 
thereto  under  this  act,  and  the  receipt  of  the  registrar 
of  the  court  shall  be  a  sufficient  discharge  in  respect  of 
the  amount  paid  in: 

Provided  that,  if  so  agreed,  the  payment  in  case  of 


APPENDIX  213 

death  shall,  if  the  workman  leaves  no  dependents,  be 
made  to  his  legal  personal  representative,  or,  if  he  has 
no  such  representative,  to  the  person  to  whom  the  ex- 
penses of  medical  attendance  and  burial  are  due. 

(6)  Rules  of  court  may  provide  for  the  transfer  of 
money  paid  into  court  under  this  act  from  one  court  to 
another,  whether  or  not  the  court  from  which  it  is  to  be 
transferred  is  in  the  same  part  of  the  United  Kingdom 
as  the  court  to  which  it  is  to  be  transferred. 

(7)  Where  a  weekly  payment  is  possible  under  this 
act  to  a  person  under  any  legal  disability,  a  county 
court  may,  on  application  being  made  in  accordance 
with  rules  of  court,  order  that  the  weekly  pajTnent  be 
paid  during  the  disability  into  court,  and  the  provisions 
of  this  schedule  with  respect  to  suras  required  by  this 
schedule  to  be  paid  into  court  shall  apply  to  sums  paid 
into  court  in  pursuance  of  any  such  order. 

(8)  Any  question  as  to  who  is  a  dependent  shall,  in 
default  of  agreement,  be  settled  by  arbitration  under 
this  act,  or,  if  not  so  settled  before  payment  into  court 
under  this  schedule,  shall  be  settled  by  the  county  court, 
and  the  amount  payable  to  each  dependent  shall  be  set- 
tled by  arbitration  under  this  act,  or,  if  not  so  settled 
before  payment  into  court  under  this  schedule,  by  the 
county  court.  Where  there  are  both  total  and  partial 
dependents  nothing  in  this  schedule  shall  be  construed 
as  preventing  the  compensation  being  allotted  partly  to 
the  total  and  partly  to  the  partial  dependents. 

(9)  Where,  on  application  being  made  in  accordance 
with  rules  of  court,  it  appears  to  a  county  court  that, 
on  account  of  neglect  of  ohildrcn  on  the  part  of  a  widow, 
or  on  account  of  the  variation  of  the  circumstances  of 
the  various  dependents,  or  for  any  other  sufficient 
cause,  an  order  of  the  court  or  an  award  as  to  the  appor- 


214  APPENDIX 

tionment  amongst  the  several  dependents  of  any  sum 
paid  as  compensation,  or  as  to  the  manner  in  which  any 
sum  payable  to  any  such  dependent  is  to  be  invested, 
applied,  or  otherwise  dealt  with,  ought  to  be  varied, 
the  court  may  make  such  order  for  the  variation  of  the 
former  order  or  the  award,  as  in  the  circumstances  of 
the  case  the  court  may  think  just. 

(10)  Any  sum  which  under  this  schedule  is  ordered 
to  be  invested  may  be  invested  in  whole  or  in  part  in  the 
Post  Office  Savings  Bank  by  the  registrar  of  the  county 
court  in  his  name  as  registrar. 

(11)  Any  sum  to  be  so  invested  may  be  invested  in 
the  purchase  of  an  annuity  from  the  national  debt 
commissioners  through  the  Post  Office  Savings  Bank, 
or  be  accepted  by  the  postmaster-general  as  a  deposit 
in  the  name  of  the  registrar  as  such,  and  the  provisions 
of  any  statute  or  regulations  respecting  the  limits  of 
deposits  in  savings  banks,  and  the  declaration  to  be 
made  by  a  depositor,  shall  not  apply  to  such  sums. 

(12)  No  part  of  any  money  invested  in  the  name  of 
the  registrar  of  any  county  court  in  the  Post  Office 
Savings  Bank  under  this  act  shall  be  paid  out,  except 
upon  authority  addressed  to  the  postmaster-general  by 
the  treasury  or,  subject  to  regulations  of  the  treasury, 
by  the  judge  or  registrar  of  the  county  court. 

(13)  Any  person  deriving  any  benefit  from  any 
moneys  invested  in  a  post  office  savings  bank  under  the 
provisions  of  this  act  may,  nevertheless,  open  an  account 
in  a  post  office  savings  bank  or  in  any  other  savings 
bank  in  his  own  name  without  being  liable  to  any 
penalties  imposed  by  any  statute  or  regulations  in 
respect  of  the  opening  of  accounts  in  two  savings  banks, 
or  of  two  accounts  in  the  same  savings  bank. 

(14)  Any  workman  receiving  weekly  payments  under 


APPENDIX  215 

this  act  shall,  if  so  required  by  the  employer,  from  time 
to  time  submit  himself  for  examination  by  a  duly  quali- 
fied medical  practitioner  provided  and  paid  by  the 
employer.  If  the  workman  refuses  to  submit  himself  to 
such  examination,  or  in  any  way  obstructs  the  same, 
his  right  to  such  weekly  pa^Tnents  shall  be  suspended 
until  such  examination  has  taken  place. 

(15)  A  workman  shall  not  be  required  to  submit 
himself  for  examination  by  a  medical  practitioner  under 
paragraph  (4)  or  paragraph  (14)  of  this  schedule  other- 
wise than  in  accordance  with  regulations  made  by  the 
secretary  of  state,  or  at  more  frequent  intervals  than 
may  be  prescribed  by  those  regulations. 

Where  a  workman  has  so  submitted  himself  for 
examination  by  a  medical  practitioner,  or  has  been 
examined  by  a  medical  practitioner  selected  by  himself, 
and  the  employer  or  the  workman,  as  the  case  may  be, 
has  within  six  days  after  such  examination  furnished  the 
other  with  a  copy  of  the  report  of  that  practitioner  as  to 
the  workman's  condition,  then,  in  the  event  of  no  agree- 
ment being  come  to  between  the  employer  and  the 
workman  as  to  the  workman's  condition  or  fitness  for 
employment,  the  registrar  of  a  county  court,  on  appli- 
cation being  made  to  the  court  by  both  parties,  may,  on 
payment  by  the  applicants  of  such  fee  not  exceeding 
one  pound  [$4.87]  as  may  be  prescribed,  refer  the  mat- 
ter to  a  medical  referee. 

The  medical  referee  to  whom  the  matter  is  so 
referred  shall,  in  accordance  with  regulations  made  by 
the  secretary  of  state,  give  a  certificate  as  to  the  condi- 
tion of  the  workman  and  his  fitness  for  employment, 
specifying,  where  necessary,  the  kind  of  employment 
for  which  he  is  fit,  and  that  certificate  shall  be  con- 
clusive evidence  as  to  the  matters  so  certified. 


21G  APPENDIX 

Where  no  agreement  can  be  come  to  between  the 
employer  and  the  workman  as  to  whether  or  to  what 
extent  the  incapacity  of  the  workman  is  clue  to  the  ac- 
cident, the  provisions  of  this  paragraph  shall,  subject 
to  any  regulations  made  by  the  secretary  of  state,  apply 
as  if  the  question  were  a  question  as  to  the  condition  of 
the  workman. 

If  a  workman,  on  being  required  so  to  do,  refuses  to 
submit  himself  for  examination  by  a  medical  referee  to 
whom  the  matter  has  been  so  referred  as  aforesaid,  or 
in  any  way  obstructs  the  same,  his  right  to  compensation 
and  to  take  or  prosecute  any  proceeding  under  this  act 
in  relation  to  compensation,  or,  in  the  case  of  a  work- 
man in  receipt  of  a  weekly  pajTnent,  his  right  to  that 
weekly  payment,  shall  be  suspended  until  such  examin- 
ation has  taken  place. 

Rules  of  court  may  be  made  for  prescribing  the  man- 
ner in  which  documents  are  to  be  furnished  or  served 
and  applications  made  under  this  paragraph  and  the 
forms  to  be  used  for  those  purposes  and,  subject  to  the 
consent  of  the  treasury,  as  to  the  fee  to  be  paid  under 
this  paragraph. 

(16)  Any  weekly  payment  may  be  reviewed  at  the 
request  either  of  the  employer  or  of  the  workman,  and 
on  such  review  may  be  ended,  diminished,  or  increased, 
subject  to  the  maximum  above  provided,  and  the 
amount  of  pajTnent  shall,  in  default  of  agreement,  be 
settled  by  arbitration  under  this  act : 

Provided  that  where  the  workman  was  at  the  date  of 
the  accident  under  twenty-one  years  of  age  and  the 
review  takes  place  more  than  twelve  months  after  the 
accident,  the  amount  of  the  weekly  pa^Tnent  may  be 
increased  to  any  amount  not  exceeding  fifty  per  cent  of 
the  weekly  sum  which  the  workman  would  probably 


APPENDIX  217 

have  been  earning  at  the  date  of  the  review  if  he  had 
remained  uninjured,  but  not  in  any  case  exceeding  one 
pound  [$4.87]. 

(17)  Where  any  weekly  pajTnent  has  been  continued 
for  not  less  than  six  months,  the  liability  therefor  may, 
on  application  by  or  on  behalf  of  the  employer,  be 
redeemed  by  the  payment  of  a  lump  sum  of  such  an 
amount  as,  where  the  incapacity  is  permanent,  would, 
if  invested  in  the  purchase  of  an  immediate  life  annuity 
from  the  national  debt  commissioners  through  the  Post 
Office  Savings  Bank,  purchase  an  annuity  for  the  work- 
man equal  to  seventy-five  per  cent  of  the  annual  value 
of  the  weekly  payment,  and  as  in  any  other  case  may  be 
settled  by  arbitration  under  this  act,  and  such  lump  sum 
may  be  ordered  by  the  committee  or  arbitrator  or  judge 
of  the  county  court  to  be  invested  or  otherwise  applied 
for  the  benefit  of  the  person  entitled  thereto :  Provided 
that  nothing  in  this  paragraph  shall  be  construed  as 
preventing  agreements  being  made  for  the  redemption 
of  a  weekly  paj-ment  by  a  lump  sum. 

(18)  If  a  workman  receiving  a  weekly  payment, 
ceases  to  reside  in  the  United  Kingdom,  he  shall  there- 
upon cease  to  be  entitled  to  receive  any  weekly  pajment 
unless  the  medical  referee  certifies  that  the  incapacity 
resulting  from  the  injur}'  is  likely  to  be  of  a  permanent 
nature.  If  the  medical  referee  so  certifies,  the  workman 
shall  be  entitled  to  receive  quarterly  the  amount  of  the 
weekly  pa}Tnents  accruing  due  during  the  preceding 
quarter  so  long  as  he  proves,  in  such  manner  and  at 
such  intervals  as  may  be  prescribed  by  rules  of  court, 
his  identity  and  the  continuance  of  the  incapacity  in 
respect  of  which  the  weekly  payment  is  payable. 

(19)  A  weekly  payment,  or  a  sum  paid  by  way  of 
redemption  thereof,   shall   not  be  capable  of  being 


218  APPENDIX 

assigned,  charged,  or  attached,  and  shall  not  pass  to 
any  other  person  by  operation  of  law,  nor  shall  any 
claim  be  set  off  against  the  same. 

(20)  Where  under  this  schedule  a  right  to  compensa- 
tion is  suspended  no  compensation  shall  be  payable  in 
respect  of  the  period  of  suspension. 

(21)  Where  a  scheme  certified  under  this  act  pro- 
vides for  payment  of  compensation  by  a  friendly  so- 
ciety, the  provisions  of  the  proviso  to  the  first  sub- 
section of  section  eight,  section  sixteen,  and  section 
forty-one  of  the  Friendly  Societies  Act,  1896,  shall  not 
apply  to  such  society  in  respect  of  such  scheme. 

(22)  In  the  application  of  this  act  to  Ireland  the  pro- 
visions of  the  County  Officers  and  Courts  (Ireland) 
Act,  1877,  with  respect  to  money  deposited  in  the  Post 
Office  Savings  Bank  under  that  act  shall  apply  to 
money  invested  in  the  Post  Office  Savings  Bank  under 
this  act. 

SECOND   SCHEDULE 

Arhitraiion,  etc. 

(1)  For  the  purpose  of  settling  any  matter  which 
under  this  act  is  to  be  settled  by  arbitration,  if  any  com- 
mittee, representative  of  any  employer  and  his  work- 
men, exists  with  power  to  settle  matters  under  this  act 
in  the  case  of  the  employer  and  workmen,  the  matter 
shall,  unless  either  party  objects  by  notice  in  writing 
sent  to  the  other  party  before  the  committee  meet  to 
consider  the  matter,  be  settled  by  the  arbitration  of  such 
committee,  or  be  referred  by  them  in  their  discretion  to 
arbitration  as  hereinafter  provided. 

(2)  If  either  party  so  objects,  or  there  is  no  such 
committee,  or  the  committee  so  refers  the  matter  or 
fails  to  settle  the  matter  within  six  months  from  the 


APPENDIX  219 

date  of  the  claim,  the  matter  shall  be  settled  by  a  single 
arbitrator  agreed  on  by  the  parties,  or  in  the  absence  of 
agreement  by  the  judge  of  the  county  court,  according 
to  the  procedure  prescribed  by  rules  of  court. 

(3)  In  England  the  matter,  instead  of  being  settled 
by  the  judge  of  the  county  court,  may,  if  the  lord  chan- 
cellor so  authorizes,  be  settled  according  to  the  like 
procedure,  by  a  single  arbitrator  appointed  by  that 
judge,  and  the  arbitrator  so  appointed  shall,  for  the 
purposes  of  this  act,  have  all  the  powers  of  that 
judge. 

(4)  The  Arbitration  Act,  1889,  shall  not  apply  to  any 
arbitration  under  this  act;  but  a  committee  or  an  arbi- 
trator may,  if  they  or  he  think  fit,  submit  any  question 
of  law  for  the  decision  of  the  judge  of  the  county  court, 
and  the  decision  of  the  judge  on  any  question  of  law, 
either  on  such  submission,  or  in  any  case  where  he  him- 
self settles  the  matter  under  this  act,  or  where  he  gives 
any  decision  or  makes  any  order  under  this  act,  shall  be 
final,  unless  within  the  time  and  in  accordance  with  the 
conditions  prescribed  by  rules  of  the  Supreme  Court 
either  party  appeals  to  the  court  of  appeal ;  and  the 
judge  of  the  county  court,  or  the  arbitrator  appointed 
by  him,  shall,  for  the  purpose  of  proceedings  under  this 
act,  have  the  same  powers  of  procuring  the  attendance 
of  witnesses  and  the  production  of  documents  as  if  the 
proceedings  were  an  action  in  the  county  court. 

(5)  A  judge  of  county  courts  may,  if  he  thinks  fit, 
summon  a  medical  referee  to  sit  with  him  as  an  assessor. 

(6)  Rules  of  court  may  make  provision  for  the  ap- 
pearance in  any  arbitration  under  this  act  of  any  party 
by  some  other  person. 

(7)  The  costs  of  and  incidental  to  the  arbitration  and 
proceedings  connected  therewith  shall  be  in  the  discre- 


220  APPENDIX 

tion  of  the  committee,  arbitrator,  or  judge  of  the  county 
court,  subject  as  respects  such  judge  and  an  arbitrator 
appointed  by  him  to  rules  of  court.  The  costs,  whether 
before  a  committee  or  an  arbitrator  or  in  the  county 
court,  shall  not  exceed  the  limit  prescribed  by  rules  of 
court,  and  shall  be  taxed  in  manner  prescribed  by  those 
rules  and  such  taxation  may  be  reviewed  by  the  judge 
of  the  county  court. 

(8)  In  the  case  of  the  death,  or  refusal  or  inability  to 
act,  of  an  arbitrator,  the  judge  of  the  county  court  may, 
on  the  application  of  any  party,  appoint  a  new  arbi- 
trator. 

(9)  Where  the  amount  of  compensation  under  this 
act  has  been  ascertained,  or  any  weekly  payment  varied, 
or  any  other  matter  decided  under  this  act,  either  by  a 
committee  or  by  an  arbitrator  or  by  agreement,  a  mem- 
orandum thereof  shall  be  sent,  in  manner  prescribed  by 
rules  of  court,  by  the  committee  or  arbitrator,  or  by  any 
party  interested,  to  the  registrar  of  the  county  court  who 
shall,  subject  to  such  rules,  on  being  satisfied  as  to  its 
genuineness,  record  such  memorandum  in  a  special 
register  without  fee,  and  thereupon  the  memorandum 
shall  for  all  purposes  be  enforceable  as  a  county  court 
judgment. 

Provided  that  — 

(a)  No  such  memorandum  shall  be  recorded  before 
seven  days  after  the  dispatch  by  the  registrar  of  notice 
to  the  parties  interested ;  and 

(6)  Where  a  workman  seeks  to  record  a  memoran- 
dum of  agreement  between  his  employer  and  himself 
for  the  payment  of  compensation  under  this  act  and  the 
employer,  in  accordance  with  rules  of  court,  proves  that 
the  workman  has  in  fact  returned  to  work  and  is  earn- 
ing the  same  wages  as  he  did  before  the  accident,  and 


APPENDIX  221 

objects  to  the  recording  of  such  memorandum,  the 
memorandum  shall  only  be  recorded,  if  at  all,  on  such 
teiTns  as  the  judge  of  the  county  court,  under  the  cir- 
cumstances, may  think  just;  and 

(c)  The  judge  of  the  county  court  may  at  any  time 
rectify  the  register;  and 

(d)  Where  it  appears  to  the  registrar  of  the  county 
court,  on  any  information  which  he  considers  sufficient, 
that  an  agreement  as  to  the  redemption  of  a  weekly  pay- 
ment by  a  lump  sum,  or  an  agreement  as  to  the  amount 
of  compensation  payable  to  a  person  under  any  legal 
disability,  or  to  dependents,  ought  not  to  be  registered 
by  reason  of  the  inadequacy  of  the  sum  or  amount,  or 
by  reason  of  the  agreement  having  been  obtained  by 
fraud  or  undue  influence,  or  other  improper  means,  he 
may  refuse  to  record  the  memorandum  of  the  agree- 
ment sent  to  him  for  registration ;  and  refer  the  matter 
to  the  judge,  who  shall,  in  accordance  with  rules  of 
court,  make  such  order  (including  an  order  as  to  any 
sum  already  paid  under  the  agreement)  as  under  the 
circumstances  he  may  think  just;  and 

(e)  The  judge  may,  within  six  months  after  a  memo- 
randum of  an  agreement  as  to  the  redemption  of  a 
weekly  payment  by  a  lump  sum,  or  of  an  agreement  as 
to  the  amount  of  compensation  payable  to  a  person 
under  any  legal  disability,  or  to  dependents,  has  been 
recorded  in  the  register,  order  that  the  record  be 
removed  from  the  register  on  proof  to  his  satisfaction 
that  the  agreement  was  obtained  by  fraud  or  undue 
influence  or  other  improper  means,  and  may  make  such 
order  (including  an  order  as  to  any  sum  already  paid 
under  the  agreement)  as  under  the  circumstances  he 
may  think  just. 

(10)  An  agreement  as  to  the  redemption  of  a  weekly 


222  APPENDIX 

payment  by  a  lump  sum  if  not  registered  in  accordance 
with  this  act  shall  not,  nor  shall  the  payment  of  the  sum 
payable  under  the  agreement,  exempt  the  person  by 
whom  the  weekly  payment  is  payable  from  liability  to 
continue  to  make  that  weekly  payment,  and  an  agree- 
ment as  to  the  amount  of  compensation  to  be  paid  to  a 
person  under  a  legal  disability  or  to  dependents,  if  not 
so  registered,  shall  not,  nor  shall  the  payment  of  the  sum 
payable  under  the  agreement,  exempt  the  person  by 
whom  the  compensation  is  payable  from  liability  to  pay 
compensation,  unless,  in  either  case,  he  proves  that  the 
failure  to  register  was  not  due  to  any  neglect  or  default 
on  his  part. 

(11)  Where  any  matter  under  this  act  is  to  be  done  in 
a  county  court,  or  by,  to,  or  before  the  judge  or  regis- 
trar of  a  county  court,  then,  unless  the  contrary  inten- 
tion appear,  the  same  shall,  subject  to  rules  of  court,  be 
done  in,  or  by,  to,  or  before  the  judge  or  registrar  of  the 
county  court  of  the  district  in  which  all  the  parties  con- 
cerned reside,  or  if  they  reside  in  different  districts  the 
district  prescribed  by  rules  of  court,  without  prejudice 
to  any  transfer  in  manner  provided  by  rules  of  court. 

(12)  The  duty  of  a  judge  of  county  courts  under  this 
act,  or  in  England  of  an  arbitrator  appointed  by  him, 
shall,  subject  to  rules  of  court,  be  part  of  the  duties  of 
the  county  court,  and  the  officers  of  the  court  shall  act 
accordingly,  and  rules  of  court  may  be  made  both  for 
any  purpose  for  which  this  act  authorizes  rules  of  court 
to  be  made,  and  also  generally  for  carrying  into  effect 
this  act  so  far  as  it  affects  the  county  court,  or  an  arbi- 
trator appointed  by  the  judge  of  the  county  court,  and 
proceedings  in  the  county  court  or  before  any  such  arbi- 
trator, and  such  rules  may,  in  England,  be  made  by  the 
five  judges  of  county  courts  appointed  for  the  making 


APPENDIX  223 

of  rules  under  section  one  hundred  and  sixty-four  of  the 
County  Courts  Act,  1888,  and  when  allowed  by  the  lord 
chancellor,  as  provided  by  that  section,  shall  have  full 
effect  without  any  further  consent. 

(13)  No  court  fee,  except  such  as  may  be  prescribed 
under  paragraph  (15)  of  the  first  schedule  to  this  act, 
shall  be  payable  by  any  party  in  respect  of  any  pro- 
ceedings by  or  against  a  workman  under  this  act  in  the 
court  prior  to  the  award. 

(14)  Any  sum  awarded  as  compensation  shall,  unless 
paid  into  court  under  this  act,  be  paid  on  the  receipt  of 
the  person  to  whom  it  is  payable  under  any  agreement 
or  award,  and  the  solicitor  or  agent  of  a  person  claiming 
compensation  under  this  act  shall  not  be  entitled  to 
recover  from  him  any  costs  in  respect  of  any  proceed- 
ings in  an  arbitration  under  this  act,  or  to  claim  a  lien 
in  respect  of  such  costs  on,  or  deduct  such  costs  from, 
the  sum  awarded  or  agreed  as  compensation,  except 
such  sum  as  may  be  awarded  by  the  committee,  the 
arbitrator,  or  the  judge  of  the  county  court,  on  an  appli- 
cation made  either  by  the  person  claiming  compensa- 
tion, or  by  his  solicitor  or  agent,  to  determine  the 
amount  of  costs  to  be  paid  to  the  solicitor  or  agent,  such 
sum  to  be  awarded  subject  to  taxation  and  to  the  scale 
of  costs  prescribed  by  rules  of  court. 

(15)  Any  committee,  arbitrator,  or  judge  may,  sub- 
ject to  regulations  made  by  the  secretary  of  state  and 
the  treasury,  submit  to  a  medical  referee  for  report  any 
matter  which  seems  material  to  any  question  arising  in 
the  arbitration. 

(16)  The  secretary  of  state  may,  by  order,  either 
unconditionally  or  subject  to  such  conditions  or  modi- 
fications as  he  may  think  fit,  confer  on  any  comuiiltce 
representative  of  an  employer  and  his  workmen,  as 


224  APPENDIX 

respects  any  matter  in  which  the  committee  act  as  arbi- 
trators, or  which  is  settled  by  agreement  submitted  to 
and  approved  by  the  committee,  all  or  any  of  the  powers 
conferred  by  this  act  exclusively  on  county  courts  or 
judges  of  county  courts,  and  may  by  the  order  provide 
how  and  to  whom  the  compensation  money  is  to  be 
paid  in  cases  where,  but  for  the  order,  the  money 
would  be  required  to  be  paid  into  court,  and  the  order 
may  exclude  from  the  operation  of  provisos  (d)  and  (e) 
of  paragraph  (9)  of  this  schedule  agreements  submitted 
to  and  approved  by  the  committee,  and  may  contain 
such  incidental,  consequential,  or  supplemental  pro- 
visions as  may  appear  to  the  secretary  of  state  to  be 
necessary  or  proper  for  the  purposes  of  the  order. 

(17)  In  the  application  of  this  schedule  to  Scot- 
land — 

(a)  "County  court  judgment"  as  used  in  paragraph 
(9)  of  this  schedule  means  a  recorded  decree  arbitral : 

(b)  Any  application  to  the  sheriff  as  arbitrator  shall 
be  heard,  tried,  and  determined  summarily  in  the 
manner  provided  by  section  fifty-two  of  the  Sheriff 
Courts  (Scotland)  Act,  1876,  save  only  that  parties  may 
be  represented  by  any  person  authorized  in  writing  to 
appear  for  them  and  subject  to  the  declaration  that  it 
shall  be  competent  to  either  party  within  the  time  and 
in  accordance  with  the  conditions  prescribed  by  act  of 
sederunt  to  require  the  sheriff  to  state  a  case  on  any 
question  of  law  determined  by  him,  and  his  decision 
thereon  in  such  case  may  be  submitted  to  either  division 
of  the  court  of  session,  who  may  hear  and  determine  the 
same  and  remit  to  the  sheriff  with  instruction  as  to  the 
judgment  to  be  pronounced,  and  an  appeal  shall  lie 
from  either  of  such  divisions  to  the  House  of  Lords. 

(c)  Paragraphs  (3),  (4),  and  (8)  shall  not  apply. 


APPENDIX 


225 


(18)  In  the  application  of  this  schedule  to  Ireland 
the  expression  "judge  of  the  county  court "  shall  include 
the  recorder  of  any  city  or  town,  and  an  appeal  shall  lie 
from  the  court  of  appeal  to  the  House  of  Lords. 


THIRD    SCHEDULE 


Description  of  disease 

Description  of  process 

Anthrax 

Handling  of  wool,  hair,  bristles, 

hides,  and  skins. 

Lead  poisoning  or  ita  sequela}  .     .     . 

Any  process  involving  the  use  of 

lead  or  its  preparations  or  com- 

pounds. 

Mercury  poisoning  or  ita  sequelae 

Any  process  involving  the  use  of 

mercury  or  its  preparations  or 

compounds. 

Phosphorus  poisoning  or  its  sequels 

Any  process  involving  the  use  of 

phosphorus  or  its  preparations 

or  compounds. 

Arsenic  poisoning  or  its  sequelae    .    . 

Any  process  involving  the  use  of 

arsenic   or   its   preparations   or 

compounds. 

Ankylostomiasis 

Mining. 

Where  regulations  or  special  rules  made  under  any 
act  of  Parliament  for  the  protection  of  persons  em- 
ployed in  any  industry  against  the  risk  of  contracting 
lead  poisoning  require  some  or  all  of  the  persons 
employed  in  certain  processes  specified  in  the  regula- 
tions or  special  rules  to  be  periodically  examined  by 
a  certifying  or  other  surgeon,  then,  in  the  application 
of  this  schedule  to  that  industr}-,  the  expression  "pro- 
cess" shall,  unless  the  secretary  of  state  otherwise 
directs,  include  only  the  processes  so  specified. 


APPENDIX  E 

TABLE  A 

The  WorkmerCs  Insurance  of  the  German  Empire 

Total  population  58,000,000 
Wage-workers  i    14,500,000 

Summary '  — 1902 


Insurance  against 


Persons  insured 

Persons  compensated  » 

Receipts'  (marks)' 

Including       /  employers 

contributions  of  |  employed 
Expenses  "> 

Including  <  compensation  « 
costs  of    ( administration  'i 

Accumulated    funds" 

Compensation  per  Case's 

Charges  per  person  insured  '*. . 


SickneBB 


10,320,0003 
3,983,900 
200,350,600 
58,624,900 
130,784,000 
194,060,000 
183,174,100 
10,885,900 
186,645,200 
46.0 
18.8 


Accident 


19,083,000* 
834,600 
141,394,100 
125,663,300 

124,796,900 

108,133,100 

16,663,800 

199,194,300 

128.7 

7.1 


Invalidity 


13,381,0006 

1,061,000 

210,677,100* 

69,492,900 

69,492,900 

132,361,800* 

120,414,1009 

11,947,700 

1,007,477,500 

113.08 
13.29 


The  National"  Insurance  — based  on  mutuality  and  self-administration 
—  is  compulsory  for  all  wage-earners '  in  Germany,  irrespective  of  nation- 
ality, and,  unlike  mere  Poor-Law  Relief,  confers  on  every  insured  a  legal 
claim  — proceedings  free  of  expense — to  certain  assistance  in  case  of 
sickness,  accident,  or  invalidity  (infirmity  and  old  age). 

»  Wage-workers  =  professional  workmen  and  laborers  on  wages;  wage-earners  = 
all  persons  working  for  wages  or  salary  (up  to  ^000  marks  per  annum),  as  well  work- 
men and  laborers  as  industrial  and  agricultural  otfioials,  oomuiercial  assistants  and 
small  employers  (masters  and  farmers).  ■  The  numbers  are  taken  from  tlie  finan- 
cial statement  1902  (01).  3  Persons  employed  for  wages  or  salary  (see  note  1)  in  trade 
and  commerce,  partly  in  agriculture  (forestry)  and  domestic  service;  see  Table  B. 
«  Persons  employed  (see  note  Din  industry  and  agriculture  (forestry)  — not  in  com- 
merce, handicrafts,  and  petty  trades—  including  about  4,800.000  small  farmers  (with 
areas  under  10  hectares)  and  l,500,ooo  persons  insured  in  additional  or  double  employ- 
ments; see  Table  C.  ^  Workers  of  all  trades  and  servants,  likewise  (industrial  and 
agricultural)  officials  and  commercial  ai*sistants  with  regular  year's  earnings  up  to 
2000  marks;  see  Table  1).  o  I'ersons  having  received  legal  assistance  in  money  or  in 
kind  (free  medical  or  hospital  treatment,  medicines,  etc.),  provided  by  the  workmen's 
insurance  laws  for  disalnlity  caused  hv  sickness,  accident,  invalidity,  or  old  age ;  see 
tables  B, CD,  ///.  '  Excluding  balance  in  hand  at  the  commencement  of  the  year  and 
interest  on  investments.  »  l  mark  =  lOO  pfennigs  hasthe  money  value  of  aliout  l  shill- 
ing or  }4  dollar,  but  the  same  purchasing  power  in  (ierniany  as  about  2  shillings  in 
(ireat  Britain  or  '/a  dollar  in  America.  "  Including  state  suDSidies;  see  Table  D,  /. 
1"  Excluding  the  year's  addition  to  the  funds,  n  Including  the  current  costs  of  the 
whole  organization.  12  Provided  by  law  in  order  to  secure  the  payments  nanied(note 
6).  13  Average  amount  paid  out  for  each  case  of  sickness,  accident,  invalidity,  or  old 
age;  see  Tables  B,  C,  I), //.  "Average  amount  paid  in  per  head  of  insured ;  sea 
Tables  B,  C  ,  U,  //.  10  Established  by  imperial  laws  embracing  the  whole  empire. 


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ceo 


pation. 

uud  17  marks). 


fed  14.5  marks). 


■ed  10.5  marks). 


bsidy). 
o  marks). 


(a)  Medical  treatment 

d;iily  WHge>s)  or: 
free  hospital  ami  >2 

(b)  The  i<ame  for  childl 

(c)  IJurial  =  20  times  d 
Exteu.siun  of  these  mil 


137  million  marks  (per 

as  So.  1,  (  term  of  reli 

but       }  sick-pay:  « 

29.7  million  marks  (per 


as  jN'o.  i,  ( term  of  reli 
but        (  sick-pay :  5( 

5.3  million  marks  (per  i 

According  to  | 
the  rules,  most  / 
4  million  marks  ( 


1 


.5  marks). 


12.5  million  marks  (per . 


marks). 


1.6  million  marks  (per 


larks ; 


-r 


per  head  7.1 


larks; 


arks; 


lark.s ; 


irks ; 


per  bead 


i)('r  ho;id  ,'„ 
'  8.0 


lier  head  fi. 

(term 
sick-) 
but        "j   fliild 
(   bnri:i 
per  sick  persor 


V 

TAilLE  I.    SK 
Tlis  tl'orkr,u!ns  l,lsUTan 

K  INSLKANCE 

ce  ill  GGtmany  and  abroad 

( 

"""-■"'"■■■•"''• 

"""-"' 

'""■""•""• 

C...n.„U,„..-t,p«a 

^"— -> 

8.,„.„..,.,a,.„.,. 

■1 

Cuinpulsury  Inaurancft  fnr: 

Voluntary  imiirnnce  fur: 
(by  Bpoclol  rules) 

■  workmen  and  omployeea('^*J'^y^|'j|y*"'"J^'^ 

lJyBpoeialrules(or:utfricuUureiindlioincinaustry 

.persons  not  oWiged  to  Insun.              1 

1-      (wltb  yiiarly  earnings  up  to  2,000  tnarka). 

Piipnlation  M.3  million— Waero-workers  11  mimon. 

ulnUtiation). 

witbout  employers'  panlolpatlDO. 

(»J  *J|«jj«'^"*"W  and  slok-imy  (60%  of  average 

free  lios]iital  and  M  sltk-pay  for  the  foully 
(l>)  Tlie  Mune  for  childbed  (4  weeks), 
(c)  iturlul  =ao  times  daily  wages. 
Sxtcnslon  of  these  minimum  reliefs  by  special  rules. 

137  million  marks  (per.^itck  jicn-m  12  marks,  per  day  2 

(Supenrlslug  Magbtracy.) 

!• 

.  1 

Voluntary  Iniurance     Vao/3/88/  for; 

itgrivulture  tuid  home  industo"- 

ropulation  25  miUlon.-Mnge-worker9a.5  million. 

M»,.l.l,c.ub.-2.,„„„to«„mb.„. 

■U.i  million  marks  iper  person  insured  H.,'>  miirks). 

I'ut       )-i.ii'      :     rim  iry  dally  wagf*. 

iSimirks). 

(ArlillrailonCourr) 

'■1 

pei^onBcngngcd  In  ^ruUe  p'^J,  ^^"^[^^^f 
J^pnl!.tIoni8mTuiou._WoeUori;er»7.5mlllIon. 

m  slcU-olob,  -  0  0  million  memMn 

C-3  million  marks  (per  petson  Insured  10.6  marks). 

but      (=Kl.  i..i>    M    ,- >ii<  (•' i.:u  marks  per  day. 
6.3  milllnn  marks  (jwr  nick  jM-rson  20  marks,  pt'r  day  I. 

-""--"■> 

1    3. 

'■  t 

(Law  ot  in/4/86.) 

working  people  of  all  ealliiigs. 
iVpuliitlonai.Cmilllon.—M'iige-worltiTaO  million. 

!i*|HE!m.=jij.ooi..l.., 

e,T25  friendly  societies.  -  1  milljou  mcmbtrs. 

w^"li^t  P^'*"^Bes  (Btato  subsidy). 

According  to     i  only  »lek-pay  and  funeral  exiwnses. 
the  rules,  most  1  not  doctor  or  hospital  free. 
4  million  marks  (pcrlicad  4  marks). 

- 

T'^ 

"■l 

StailfltJc«(1805); 
CompiilHory  tnsuranoc  for: 

PopulfttIon38.3  million  ,-Waee-workcra9.5mUlioJi. 
Sllner*  (up  lo  2.000  marks  yearly  wagtw). 

lo;58B  friendly  societies. -  l.G  million  members. 

30  million  marks  (per  bead  12.5  marks), 
tu  -Vo.  J. 

--"—'--";—-- 

--- 

1  - 

'■  1 

V'^'^°'23/m) 

PopulatlonO^milllon.  —  W&ee-workersSmtlllon. 

(nSfrlendl    soeiellea      136  000  members 

11  million  marks!  er  head  8  marks) 

„,„.. 

h 

_  1 

('^*'"t^^"'^'-**-) 

IMplilat  Ion  40  million.  —  Wnge-wfirker«  ISmitllon. 

2fi,0Ml  friendly  societies.— 4,S  million  mewben): 

only  half  of  tlicm  workmen. 

Vo  ofBcinI  BlfltlBtlcs 

^ 

V 

(Couiiulsory  Insuninoo  pluiued  nlncc 

Populfltlon  2  million.  ~  Wago-workeTsO.4  million. 

(1SS5    230   I  k    1  M     45000           1 

.^TOmgc:  perhcadT.TS marks: 

.„....„,„rc,.™..,. 

h 

i 

(LaworaO/lO/Ol.) 

Poi<u1ntlonr>ml111on.—Wngo-workersO.S  million. 

(S 

K:  573    mealar  .M«l»l»  -  TB.OOO  "'"°'"'"- 

Average:  per  head  ^~  marks; 

ppr  head  ^^  marks,  per  day   '     marks.  J 

" 

I- 

..  i 

Voluntaiy  tngiimnpe 
(Lnwofia/VJ2.) 

Populn  lion  3,3  million.— ■Wage-workers  O.amllllon. 

(.1 

Ki;     028    regular   siCh-ClUbs  —  1M.W2 

AToraRe;  per  head  ^-^  marks; 

per  head  J^  mark.,  per  day  '^^  marks.) 

|. 

£ 

Vnlnntury  Innumnoe. 
(UrdiT  of  2/B/B7.) 

ropulnlion  3  n.illh.n  -W.^ro- workers  0  B  million 

(1880-  lit  ,tel..cll.b.-16JiM  iDtnibou 

Ayernge- per hes.1r.ta marks- 

per  head  fl.BO  ma^k^  per  day  1,66  marks.) 

1- 

1 

Compulsory-  InBiininco  for: 
TolantatTlnKuntneefor: 

working  |.r..|.|.  ..1   lii '^^  .N|i  111  1800  marks). 

B,., ...ZuZZT' 

FT..       |"""°'™io.A-o.<. 

KmployersKj      In  % 
Employed  M  1  on  wages. 

AveraKc:  per  head  10  marks; 

asXo.l.  J  Bfpk-pny:  00  %  of  aferage  wage,. 

Fiw- 
Kcderal  InsutBncc  Conrt.) 

< 
I'V 

/i 

i 

, 

^ 

c 


o 


ad 

nployers, 

(a)  Fr 

ES. 

C(J! 

wi 

e;i 

(b)  Itii 

to 

All  ac< 

Uli 

marks). 

71.7  mi 

3 

(a)  On 

(b)  bu 

9. 

marks),  j 

5.4  mi 

"1 

No 

(a)  Ft 

or 

fr 

(b)r< 

(c)  F( 

X 

ere:  75% 

'  (a)  F. 

ed:   25% 

fi 

)le). 

(b)  F 

i  (c)  fr 

(up  t. 


r« 

TABLE  11.   ACCIDENT INSllU-NCE 
The  Wor/fmct}'s  Insurance  in  Germany  and  Abroad 

1  ,,,„..„..„„.-™.. 

1 

""™'-                        1                  -~— -..i. 

""••■■-"'- 

..„„.,.„.,..,.„ 

6- 

'■    1 

(Imperial  law  of  i»»4-188T.) 
I(y  fpeelal  nilra  for 

8tatUUC8(I838) 

i  workmen  and  employe*  ("^''^S  mlT) 
lenpmedlntradeamUBrioulluri).  ' 

■  omployuci  witU  salaries  alwvo  2.000  marks 
1  mnnll  employers  [bulliling  trade,  agriculture). 

tUe  employers  and  peraons  not  under  compulsion, 
ropulatlon  M  3  million.-  Wagc-workors  »  mflllDu. 

'""'■  1  pulillc  works. 

according  to  wages  and  risks. 

(a)  Free  medic*)  ircaimenl  jind  jienslon  [uji  to    from  the 

wltli"'rellef  to  family  (up  toflO-jfe  of  year'*    after  the 
earnings)                                                               (aceidcnt. 

Arbitration  Court,  Imperial  In- 
surance I)epartuient(wlth  equal 

employed). 

f  . 
1 

;i.T  million  marks  ipald  to  433.485  injured,  70,061  children  I  of 
2/il5  parents    ) 

killed  men.  etc). 

! 

CompulAuf}  Insurance  for 

1  workmen  and  emjilojees  ^  ^^^^^  earnings  / 

'  engaged  In  trade  (Including  ogiicullural  madDinery) 

employers  and  persons  not  Halilo  to  Insure  (up  to  S,non 
marks  yearly). 

I'opulntlon  2.1  million.  —  ■Wage- worker*  i).5  million. 

1  for  Maw- railways. 

p       .         1  employers :  90% 

(n)  Only  accident  pension  (up  to  00%)  from  the  StU  week, 
M  million  marks  (jiaid  to  27.14*  injured,  v'^iiHihlldren"  ^^ 

Arbitration  court  only. 

1  ^- 

3-     1 

Nol„,.™oe. 

ropulatlon  18  million.  —  W.ige- workers  7-6  million. 

1891  to  IntrodKce  the  accident  Insurance  for  the  i-ulustry  ,.ce  ■■  Tl.e  W,.rUme.iS  Insurance  Abroad."  vol.  vlll.  p.  lOfi  Coll.). 

1       3. 
1 

*.     ^ 

Compulsr>r>-  Iniurnnce  for* 

1  workmen  and  employees  (with  salaries  lo  1700  marks) 
Fopulationai.GmllMon.  — Wage-workers  0  million. 

State  nr  private  institutions  at  employer's 

Employers  only. 

(a.)  For  Injured .  elck-pav  up  to  SO^o  of  dally  wages  from  Gth 
day, 

(0)  For  survivors:  lump  sum  as  above. 

All  accidents  are  compensated  (OS  Xo.  J). 

(up  to  itM  marks). 

otherwise  tbe  ordinary  court 

(reduoed  costs). 

!'■ 

■1 

VolunLiry  Jnsiimnce  fur: 

(LnwofO/i/lWO 

Compul9or>*  iusurnnce  for: 
(Lftwof2l/*;M.) 

(  workmen  and  employeei  (np  to  9.40n  mark*  yearly) 
I  engaged  in  trade  tincludine  agricultiirnl  mnclilhery). 

Population  38.3  million.  —  ■Wage-workers  13 million. 

.'State  institution. 

Employers        . 

(a)  For  Injured:  slok-pay  np  tc  B0%  of  dally  wage*  from 

(b)  For  Invalids:  pension  up  to  MS%of  yearly  earnings, 

(c)  For  survivors:  pension  up  to  00%, 

In  case  of  „  "'^("^n^e  ''^*'*^  N"«*l  ,^  compensation  ! 

J  Invalids'  pension  (100-340  marks)  1  sick  pay  for  injured 
1  Survivon-      "       (lAO  -  300  marks) )       up  to  G  months. 

(summarily). 

■• 

.  1 

Compulsory   Insurance  for: 
(UwofM/S/ee.) 

Miners  (ea.  120.000). 

Population  0.6  mlllton.  —  Wage-workers  2  mlHion. 

ic  c  u  IS  j  pQ,.^ipij,n|jQn_ 

Employers,  employed,  state,  and  province. 

According  to  tbe  rules. 

*■   c 

"1 

Volunifiry  insnrance  for : 
tLaworo/S/ltT.) 

.workmen  and  employees  (up  to  '.',000  murks  yejirly) 
1  engaged  in  traOe. 

Population  40  million  —WnBe-workers  0.4  nilMloii. 

(a)  Only  DC^cident  pension  (up  touC;;)  of  tbe  wages]  from  tb 
ofthelnjnrcd! 

(reduced  costs). 

c 

•' 

Compulsory  Insurance  for: 
lLaw<»r23/7/M.) 

[workmen  and  employees  {up  lo  1,'iOO  marks  yearly^ 
t  engaged  in  trade. 

Population  2  million.— Wage- workers  0.4  million. 

l':mp1oyers'  premiums  according  to  wages 

(n)  Free  medical  treatment  and  pension  (up  lo  00%    from  the 

free  liusplcal  with  relief  to  rnuiily(upta50%  of    after  tbe 
wages.                                                                      accident. 

oco    pe  .to      n    '>^'^°''|  inva|jjnj.underS%. 

3    »■ 

^1 

No  insurance 

R.,o™„„p„.a.,n.c 

IMS  to  Introduce  cnm]>iilsory  insurance  for  all  wage-workers  fseu  "  The  Workmen's  Insurance  Abroad,"  vol.  il,  p.  3,  foil.;. 

~ 

1 ' 

i 

Voluntary  Insurance  for: 

(lAWOf7/l/0S.) 

.  workmen  and  employee*  (Ui<  to  2.70(i  mnrks  yearly) 
1  engaged  in  trade. 

(a)  For  Injured :  slok  jiny  up  to  00^  of  dally  wages  from  tbe 

(b)  For  Invalids:  lumpsum  up  tu(S  times  yearly  eamlngc, 

(0)  For  survivors:  lump  sum  up  to  4  times  yearly  earning* 

No  compensation  in  case  of  ^i^-"^  o^  the  Injured. 

j,o. 

1 

1 

CompuUory  InBurunce  for: 

workmen  engaged  in  ir.iilc  (up  to  000  marks  ye.irly). 
Population  3  million. -  Wnge-workere  0,6  million. 

(a)  For  injured :  sick-jiay  up  to  00%  of  dally  wages .  , 

free  hospital  with  relief  to  family  (40%)              J    7tb  day 

(b)  For  invalids;  pension  up  to  00",  of  yearly  wages. 
(C)  For  survivors:  pension  up  to  40%  of  yearly  wages 

So .ompens.-it Ion  in  case  of  ,|"'|^j'"'^"p  of  the  Injured. 

Ordinary  court. 

3 

i 
s 

(Lawof5/10/TO,MeI.  I2-) 

the  employeiB. 

ITomlunwl'""^''*^*'*'  '^    <"'  ^"''  W'"-Bd:  medical  relief  ""'I  *lol<-I>ay  or:  j  ^i^'ll^t 
lemployeit:  'JWi.           free  hospltalwlth  relief  lornmlly                           nw  wwk 
8..».a„.,ay  <V.  .f  .UC  ,«„«.              ,,__  ^^^  ,^^,,^_^  _,^,,^,^^  ^^  ^  ^^  ^^^^^^^  ,„„„ ^ 

(C)  forsurrlrom:  pension  (up  to  S0%)  and  fum-ral  expenses 
(up  to  83  marks). 

1        Ko  compensation  ''"''»^'>'„^^^e''' tlie  Injured. 

(Federal  Insurance  Court.) 

1    .^ 
1 

m 


m 


n'9  Insurance 


'he  Workmen' 


[nsurancc  Abi 


:men's  Insurai 


tell  one-lialf). 


ion). 


as  jS 


m 


^ 


TABLE  III.     INVALID  LNSURANCE 
The  Worhmni's  Insurance  in  Germanu  and  Abroad 


,„„.,„,„„...  ™.. 

,.„„, 

ConlribulloD.  lo  br  f«l                                                                                                    a-MtiU  Mcund 

S«tl]<u.<»luldi.pul« 

,.  i 

(tapoH.iu.w<,r^«) 

/  all  wago-workcra  a 
(     UaiKlearutli) 

roiiQlutioii  &i.;i  inilUu 

nd  employee*  (with  salaries 

«niall  iJiasiors  t  "'''  '^'^^•-■•^ 
n. —Wage- worker*  U  million. 

mutuality  and  soU-admlnistratiun). 
IleslUes:  Special  organs   for  railways  ond 

Enual  ureiniums  bv  I  ^'■'P',°l^"'-                  (»>  luvalitl  jieosion  for  Invalids  (after  MO  contributory  weeks), 
and  State  subsidy  (50  marks  par  annuity).         1  (o(  Free  vuic  with  relief  to  family  In  order  to  present  Invalidity, 
pension  oblnlnnble). 

Arbltiatlon  Court,  Imperial  In- 
sarance Department  (witb  equal 
reiireacntaitonot  employers  and 
employed). 

1- 

'J 

Miiicn(ISO.O<W), 
Populntlon  ai  inilUon 

—Wage-workers  9.5  mjUioii. 

ui  proposed  Since  1S91  to  Introduce  compulsory 

'"""""'^-'•'»^Msii"'""""sH;SH;s^ 

..,™,o„Cou. 

1     ''■ 

x.,»™.. 

- 

- 

1 

- 

1     »■ 

'■  1 

(LawoflTA/IM.) 

Population  31. G  milli 

n-  —  Wage-workers  0  million. 

Stutc  inatltution. 

Premiums  of  tbe  insnred  (nt  least  5  marks,  at  most    (a)  Invalid  pension  for  invalids  (after  0  contributory  years), 

eo  marks  yearly).                              ,  (b)  Old-age  pension  for  sexagenarians  (after  2S  contributory  years) 
State  subsidy  (up  to  ID  marks  per  head).           1  to)  Reimbursement  of  contributors  iu  case  of  death. 

- 

i   <• 

i 

CoinpulMOry  [  Low  or  11/4/81  for: 
l...m.ic«  ilj,worM/«/wror: 

Popiiiatlon  M  million 
Seamen. 

—  Wage- workers  5  million. 
rks  yearly  camlng«). 

iHEHt  1  *'"■'*"'  "'"*  "*=''  pensions                                               marks  yearly),                                ,  (b)  Invalid  pension  for  eiirlier  Inflnaity  1        yearly, 
j  Average;  130  marks.                    1            State  subsidy  (up  to  t  of  the  peuslou).             i  (o)  Reimbursemeut  of  contributore  in  cnse  of  death. 

form  proposed  since  wai  to  introduoo  a  (partly)  oompul»or>-  insuninDO  (see  '■  Tlie  workmen's  Insurance  Abroad,''  vol.  iv.  p.  4?  (oil.)- 

State  institution.                         1          Control  of  the  insured,  state  subsidy.                i  Invalid  pension  from  the  eutli  year(-**'.''y!  =  i£\ 

,„„,.■  po..io„r.„a,.                           E„,.u..,6™i.ymi:;;^'             |  ,.„.,.„  ,™„  .n.  „,„  ,.„ 

comnil..lo». 

1 

0.     „ 

(lAWof  28/3/08.) 

a,n.„,...ii,o,. 

an-Xo.B.                                    '                                113  So.  a.                                                                    aaMo.S.                                                         (180T:  snoo  old-age  pensions;  average  SOO  marks.) 
Miners-  relief  clubs  (see  IE,  C).                                        Employers,  employed.                            (i)  Old-age  pension  (after  M-a".  yeflr*  or  service). 

,_ 

1 
P 

'1 

Voluntary  insumiiuc. 

Reform  proposed  alnce  law  to  Inttoduco  compQlaory  Insurance  or  old-age  pensions  by  tho  state  (see  ■•  TUe  Workmnn-a  Iiwnranoe  Abrond."  vol.  v,  p,  20  foll.)- 

_ 

1  , 
1 

•1 

^,.,„u™.. 

- 

1   ■■ 

'1 

1 

Iloform  proposed  since  1891  to  introduce  compulsory  Insarance  (see  "  The  Workmen's  Iiisuranco."  vol.  11,  p.  7.  foil.). 

- 

h 

■"•I 

.„1.„™„,.„ 

P.«.,.„,„ 

oody  people  (over  00  years  eld)    by  tlie  state  (Law  of  B/4/III), 

State  and  parisli  (each  onc-hain.    Acoordlng  to  the  need  of  tbe  party. 

— 

1 

— 

all  persons  workini;  lor  wages. 

^.ip».i..,». 

According  to  the  niles  (state  supervision). 

- 

1  "• 

i 

r°°"°°"'"'°" 

ose  engaged  on  railwnyB  and  steamers  (Law  of  28/0/80).                                                                                                                      a»  A"n,  Jl. 

- 

1 
5   i» 

i 

$■ 

INDEX 


Abineer,  Lord,  84,  86,  96,  104. 
Accident  insurance,  61,  78  et  seq. 
Accidents,  cost  of,  81,  105. 
Accidents,  mining,  80. 
Accidents,  prevention  of,  73,  109. 
Accidents,  railroad,  79,  80. 
Adams,  T.  S.,  10,  11. 
Alabama,  103. 
Alderson,  Baron,  97. 
American  Family  Bank,  131. 
Ashley,  W.  J.,  58. 
Asquith,  H.  H.,  30,  95,  97,  152, 

160,  162. 
Assessment  insurance,  125. 
Austria,  98. 

Balfour,  A.  J.,  160. 

Baltimore  &  Ohio  Railroad  relief 

department,  120. 
Bartonshill  Coal  Co.  v.  Reid,  86. 
Beach,  C.  F.,  92. 
Belgium,  98,  99. 
Birrell,  A.,  96. 
Bismarck,  57.  61.  119.  178. 
Black,  Chief  Justice.  92. 
Blackley,  W.  L.,  12,  116,  153, 

155,  161. 
Booth.  C,  13.  156.  157,  162.  165. 
Brandeis,  L.  D.,  123. 
Brett,  Lord  Justice.  96. 
British  Columbia.  98. 
Brooks,  J.  G.,  8.  12,  32,  61,  64, 

76. 
Brown,  B.  F..  129. 
Burke,  E.,  153. 

Caimes,  J.  E..  15. 
Caisse  dea  retraites,  154. 
Call.  H.  L..  11. 
Cape  of  Good  llope,  98. 
Carlyle,  T.,  3. 


Carnarvon,  Earl  of.  20. 
Chamberlain,  A.,  163. 
Chamberlain,  J.,  95,  97, 116, 155, 

172. 
Clark,  J.  B.,  22. 
Common  emplovment,  65,  89,  92, 

95.  98.  102,  l"04. 
Compulsion,   64,   66,    122,    166, 

162,  168. 
Constans,  154. 
Contributory  negligence,  92,  98, 

107. 
Cost  of  insurance,  124,  128,  129, 

132,  143,  145. 

Dangerous  employments,  7,  81, 

87,  90,  98,  174. 
Dawson,  M.  M.,  52. 
Democracy,  23,  57. 
Denmark,  98,  158. 
Devine.  E.  T..  10,  22. 
Digbv.  Sir  K.  E..  101. 
Dillon,  J.  F..  86.  104. 
Dryden,  J.  F..  123. 

Elizabeth,  Poor-Law  of,  18, 168. 
Elliott.  A.,  100. 
Elv,  R.  T..  15.  20. 
Em[)loyers'  liability,  29,  83,  85, 

109. 
Existing  institutions,  111  et  seq. 

Factory  acts.  28.  S3. 

Fanvell  v.  B.  &  W.  R.  R.,  83,  85, 

86.  88. 
Fauquier.  F.  F.,  136. 
Fetlcralist.  89. 
Fellow    servant.     See    Common 

emplovment. 
Fichte.  61 . 
Finland,  98. 


232 


INDEX 


France,  98. 

Fraternal  organizations,  119. 

Frederick  the  Great,  34. 

Frederick  III,  61. 

Friendly  Societies,  114  etseq.,162. 

Georgia,  100,  101. 

Germany,  workmen's  insurance 
in,  58,  60  et  seq.,  106, 119, 134, 
135,  140,  143,  153,  168,  175. 

Great  Britain,  94,  97  et  seq.,  106, 
152,  160,  165. 

Greece,  98. 

Hale,  E.  E.,  156. 
Hamilton,  A.,  88. 
Harrison,  A.,  28,  29. 
Hartmann,  K.,  49,  66,  68,  81. 
Hegel,  61. 

Henderson,  C.  B.,  64. 
Hendricks,  B.  J.,  126. 
Holland,  153. 
Holmes,  J.  K.,  15. 
Hungary,  93. 
Hunter,  R.,  10,  11,  15. 
Huss,  61. 
Hutchins,  B.  L.,  28,  29. 

Incidence,  45,  135  et  seq.,  147. 

Incomes,  distribution  of,  15,  144. 

Individualism,  25,  32,  34. 

Industrial  insurance,  122. 

Insurance,  excessive  cost  of,  50, 
128. 

Interstate  Commerce  Commis- 
sion, 80. 

Invalidity  insurance,  62  et  seq. 

Italy,  98. 

Jeune,  Sir  F.  H.,  86. 
Jevons,  W.  S.,  40. 

Kestner,  F.,  76. 
Klein,  G.  A.,  73,  94,  107. 
Knight,  C,  28. 
Krupp,  P.  P.  J.,  120. 
Krupp's,  71,  120. 

Labor  contract,  the,  7,  81,  89, 
145. 


Labor,  immobility  of,  9,  88, 169. 

Lalxtr's  share,  22,  146. 

Lass,  L.,  38,  61,  63,  65,  71,  76, 

114,  119. 
Lassalle,  9. 

Lecky.  W.  E.  H.,  25,  29. 
Leo  XIU.  3. 
Leroy-Beaulieu,  P.,  155. 
Living  wage,  a,  2,  4,  7,  9,  10, 14, 

21,  142,  146,  149,  171,  173. 
Lloyd,  H.  D.,  149,  159. 
Lloyd-George,  D.,  163. 
Loch,  C.  S.,  5. 
Lowe.  See  Sherbrooke. 
Luther,  61. 

McCarthy,  J.,  29. 

Malthus,  3,  19. 

Manning,  Cardinal,  3. 

Massachusetts,  91,  94,  102,  103, 
106,  109,  176,  178. 

Massachusetts  Bureau  of  Labor, 
11,  14,  16,  87. 

Massachusetts  Insurance  Com- 
missioner, 124,  128,  129,  176, 
178. 

Massachusetts  Railroad  Commis- 
sion, 80. 

Mavor,  J.,  95. 

Montesquieu,  3. 

More.  L.  B.,  14. 

Mulhall,  20. 

Netherlands,  98. 

New  South  Wales,  159. 

New  York  Bureau  of  Labor,  101, 

102,  106. 
New  Zealand,  149,  154,  158  et 

seq. 
Norway,  98. 

Old-age  insurance,  62  et  seq. 
Old-age  pensions,  112, 148  et  seq. 
Old-line  insurance,  125. 

Paine,  T.,  153. 
Parsons,  F.,  154,  159. 
Paternalism,  26,  32,  33,  43,  44, 

48. 
Pauperism,  13, 17, 18,  20,  36,  38, 

40,  44,  46,  149,  166. 


INDEX 


233 


Penn.  R.  R.  Co.  v.  Aspell,  92. 
Penn.    llailroad    reliei    depart- 
ment, 120. 
Pensions  to  public  servants,  150. 
Petrel.  The,  86. 
Pollock,  Sir  F.,  85,  86,  87. 
Poor-Laws,  18,  19. 
Postal  savinfjs  banks,  154. 
Poverty,  10. 12, 14,  17,  38,  44,  46. 
Priestly  v.  Fowler,  83,  85,  104. 
Pro  jet  Constans,  154,  156. 
Prussia.  83,  91. 

"Q  P,"  123. 
Queensland,  98. 

Rae,  J.,  50. 

Reji;istrar  of  friendly  sociedes,  116. 

Relief  dejKirtments,  120. 

Riebenach,  M.,  122. 

Risks,  tariffs  of.  49,  68,  81, 174. 

Risque  professionnd,   le,  92,  93, 

174. 
Rogers,  J.  E.  T.,  19. 
Rountree,  B.  S.,  14. 
Rubinow,  I.  M.,  64,  76,  123. 
Ruegg,  A.  H.,  97,  98,  100. 
Russia,  98. 
Ryan,  J.  A.,  10. 

Salisbury,  Lord,  110. 
Sanborn,  F.  B.,  20. 
Savings-bank  insurance,  130. 
Sa\'ings  banks,  16,  111. 
Sellers,  E.,  159. 
Shadwell,  A.,  10,  58,  76,  79  101. 

106. 
Shaw,  Chief  Justice,  84,  104. 
Sherbrooke,  Lord.  95. 
Sickness  insurance,  62  et  seq. 
Socialism,  36. 
Social  legislation,  25,  37. 
South  Australia.  98. 


Spahr,  C.  B.,  15.  144. 

Sjjain,  98. 

Stiite  insurance,  40,  42  et  sen., 

122. 
Statute  of  Labourers,  33,  173. 
Sumner,  H.  L.,  10.  11. 
Sweden,  98. 
Switzerland,  98. 

Taylor.  W.  I..  87. 

Thrift,  46.  52, 124. 1S2, 149,  161. 

168. 
Trade  unions,  118. 
Traill,  H.  D.,  29. 

U.  S.  Bureau  of  Labor,  98,  101. 

Vanderlip,  F.  A.,  59,  76.  106. 

Victoria,  159. 

Volenti  non  fit  injuria,  93,  97. 

Wage-earning  period,  4, 141. 147, 

166,  173. 
Wage  statistics,  11. 
Walford,  53,  75. 
Walker,  F.  A.,  4,  5,  9,  15. 
Warner,  A.  G.,  13,  29. 
Wealth,  distribution  of,  15. 
Webb,  S.  &  B.,  82,  87,  118. 
Weber,  A.  F.,  80,  97. 
West  Australia,  98. 
Wilkinson,  J.  F.,  152. 
William  L  61,  118. 
William  H,  61. 
Willoughby,  W.  F.,  11,  64,  101, 

113. 
Workmen's   compensation   acts, 

99,  103. 
Wright,  C.  D..  102. 
Wright,  E.,  126,  128,  131. 

Zacher.  G.,  64,  98. 
Zahn,  F.  W.,  106. 


CAMBRIDGE  .  MASSACHUSETTS 
U   .   S   .  A 


This  book  is  DUE  on  the  last  date  stamped  below 


Form  L-9-15m-7,'32 


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